Monday, March 30, 2009

Record Low Rates Hard to Ignore

The following contains excerpts from an article appearing in "Nations Building News". It looks more and more like we're seeing the bottom of the rates...and the good deals, to me. Rates are at record lows, house prices are down...but on the rise!

"The housing market heard encouraging news last week on both mortgage interest rates and housing prices, suggesting that now is a good time for prospective buyers who have been sitting on the fence to make their move.

For the week ending on Thursday, March. 26, the average interest rate on 30-year, fixed-rate mortgages fell to another record low in Freddie Mac's Primary Mortgage Market Survey, hitting 4.85%. That was down from 4.98% the previous week and 5.85% the same time a year ago.

Freddie Mac’s weekly survey dates pack to 1971 for interest rates on 30-year mortgages. One-year Treasury-indexed ARMs averaged 4.85% last week, down from 4.91% the week before and 5.24% a year earlier. Frank Nothaft, Freddie Mac’s chief economist, attributed the latest downswing in mortgage rates to the recent announcement by the Federal Reserve that it intends to purchase Treasury securities over the next six months and a subsequent decline in bond yields. Nothaft said that there is about a two percentage point difference in today’s fixed rate on a 30-year mortgage and its recent peak of 6.63% last July. This amounts to a monthly savings of $225 in mortgage payments on a $200,000 loan, he said.

Statistics for February on both new and existing home sales, he said, which both climbed about 5%, indicate that “potential home buyers are taking notice of these historically low mortgage rates.” While no one can tell for certain just how low mortgage rates will fall, prospective buyers who are holding out for even further declines may be disappointed. John Koskinen, the interim chief executive of Freddie Mac, said that home loan rates are near their bottom and any further decreases are liable to be small, according to a Reuters report on March 27. Earlier in the week, on March 24, the Federal Housing Finance Agency's monthly House Price Index showed U.S. home prices rising 1.7% on a seasonally-adjusted annual basis from December to January."