Latest Interest Rate News

Latest Interest Rate News as reported by http://www.bankrate.com/ and RisMedia.

RISMEDIA, May 2, 2011—Mortgage rates remained below the 5 percent mark, with the benchmark conforming 30-year fixed mortgage rate inching lower to 4.95 percent, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.37 discount and origination points.

The average 15-year fixed mortgage stepped down to 4.14 percent, and the larger jumbo 30-year fixed rate reset the low point of the year at 5.40 percent. Adjustable rate mortgages were also lower, with the average 5-year ARM dipping to 3.69 percent and the 7-year ARM dropping to an even 4 percent.

Mortgage rates were lower this week, but the movement in mortgage rates continues to be tame. Mortgage rates have remained within a one-third percentage point band since mid-December. The Federal Reserve did little to rock the boat, holding interest rates steady and changing very little in the post-meeting statement. Fed Chairman Ben Bernanke’s initial press release was a historic event, but uneventful. While the Federal Reserve confirmed that they will halt their bond purchases at the end of June, this has been widely expected and any resulting volatility in bond yields or mortgage rates is far from certain.

Mortgage rates are closely related to yields on long-term government bonds.

The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.95 percent, the monthly payment for the same size loan would be $1,067.54, a difference of $174 per month for anyone refinancing now.

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. The vast majority of panelists, 77 percent, don’t see much of any movement in mortgage rates over the upcoming week. The remainder are split, with 15 percent predicting an increase in mortgage rates and just 8 percent forecasting a decline in mortgage rates over the next seven days.

Consumer Confidence by Gallup

This is a follow up to a post I wrote in 2009, shortly after the consumer confidence had spiked from it's previous low of 53.  As you can see 2 years later, the consumer confidence of home buyers is hanging around 70% of people Gallup polled.  Looking back at the last 8 years tells a better story.  People were never more confident then in 2003.  Rates were low, banks were handing out loans, prices seemed to consistently be rising, even if only modestly in some areas of the US.  And then the entire market was pushed over the cliff in '06

So why have the last 3 years been nearly as high as 2005? 

• Have we stopped seeing foreclosures?
• Have the banks suddenly been lending money?
• Is employment the same rate as 2005?
• Have home prices been consistently rising since 2005?

None of the same trends from 2005 seem to exist, so why the confidence?

One reason and that is Affordability.

• Home prices reduced
• Household incomes
• Interest rates, century lows

Those who can buy, are experiencing this perfect storm that no one in 2005 was able to have.  2003-2005 confidence was there, because there was less fear. 

Today, you would agree, there is plenty of fear about our economy.  Sure, it's getting better.  Recovery is supposedly 2 years in the making.  But we are far from robust, and this recovery may never see robust.  Just like there were tiny recessions, we may only see a tiny recovery.

So, today's home buyer's have to deal with fear.  But, they are able to take advantage of unique factors that far over come their own fear.  And that is, home ownership, at remarkable affordability.  Home ownership, for nearly the same as their rents.  2nd time home buyers, matching the same price for their current home, and achieving much more house, for less payment.

For the complete story done by Gallup Poll click here.
www.gallup.com/poll/147248/Majority-Say-Good-Time-Buy-Home.aspx

30 Year Rates Back Below 5%

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via realtor.org

Rates were on the rise for what seemed to be the trend for the rest of the year. Inflation will cause this trend to continue. However, thanks to some unrest in Libya investors have been overly cautious with their capital and pouring more funds into bonds than normal. This allows banks to have more money to lend and keeps rates down. This is only a short window. The regular trend of inflationary rising rates will be back.