Interest rates moved up slightly this week just off of record lows .The following are excerpts from the newsletter on interest rates published by HSH Associates :
“The Fed announced a new move to lower interest rates and mortgage interest rates are… higher? Such is the way of the market at the end of the quarter and year, and in the midst of a holiday season. It’s worth remembering that the Fed’s new program will come as a replacement to Operation Twist and won’t actually kick off until next year, so there is no new policy in place at the moment.
Money is looking for a place to go, with investors both fearful that a deal will come or not, sloshing among investment choices when prospects look good, or not. At the expense of bonds, investors seem to have been generally favoring stocks for the last few weeks amid rising optimism and more solid economic data. Mortgage rates cannot resist the upward pull of other rates in the market indefinitely, Fed or no Fed, and they have grudgingly moved off recent bottoms.
There is no doubt that the Fed’s now multi-year campaign targeting the mortgage market is finally paying results. Persistently low mortgage rates have influenced millions to refinance and housing has perked up noticeably in the past year. Sales of existing homes rose in November to an annualized 5.04 million rate, a three-year high, but actually better than that when the distortion caused by the homebuyer tax credit of 2009 is removed from the equation. Excluding that, we are closer to a five year high, but five years ago, sales were on the way down, not up. Over the past year, the annualized rate has improved by 14.5%, and prices have firmed. With the upsurge in sales, inventory levels have dropped to 4.8 months of supply, the leanest figure since 2005. Fears of a cascade of “shadow inventory” of foreclosed and hope-to-be-sold homes into the market have so far proven unfounded, with inventory trickling into rather than flooding the market.
We go into the final week of 2012 — a holiday shortened one — with some of the best mortgage rates seen since the 1950s, a couple of weeks notwithstanding. There can be little doubt that at least some folks will be contemplating or actually making the decision to buy a home for Christmas. Good for them, and good for the economy, too. The Fed’s continual push to revive the housing market is a kind of social policy of its own, but one which has produced tremendous societal (and yes, economic) value for many and over many years. Sales of new homes produce wide ranging benefits throughout the economy; existing home sales and refinances lack the same impact, but produce service-related jobs in real estate, finance, inspections, appraisers and more. No economic recovery is fully complete without a rising housing market.
Sure, there are plenty of naysayers, especially after the bust in the housing market ate billions in equity and helped drive the economy down. Certainly, they have a valid point, but if there was only one national real estate bust since the Great Depression, perhaps another one is yet many long years out from today, and consider instead that this may be an opportunity. If history is any guide, it just may be.
Mortgage rates continue wandering for the last week of 2012, going nowhere very fast. ”
The following are interest rate quotes from Al Hermann of American California Financial:”
30 Yr Fixed FHA
Conforming 30 Yr Fixed up to $417000
Conforming Jumbo 30 Yr Fixed $417001 – $625500
Jumbo 30 Yr. to $1.5 Mil
Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)