Mortgage Rates Decline Below 5%
Mortgage Rates Decline Below 5%
European turmoil is the biggest boost to the American home buyers. Investors seeking a safer side on their moneys protection are coming to the US and in return the real estate buyers are getting a great deal, as the mortgage rates are nearing to 50 year low.
After the Federal Reserve stopped the .25 trillion purchase of mortgage backed securities, industry experts expected the rate to rise. But now the same experts expect the rates to touch 4.50% for 30 year fixed mortgage rates. As the refinance business explodes on the lower rate available.
The 30 year fixed rate last week averaged 4.84%, lowest compared to December’2009 rate of 4.86%.
The lowest rates are in direct relation to the European debt crises as the investors flocked their cash into the US bond markets for a safer heaven. The Treasury 10 year fixed reached to 3.2%, generally the mortgage fixed yields is about 1.5% points above the 10 year Treasury rates.
In general terms every 1% dip in the mortgage rates the home buyer gets a 10% reduction in home price. If the current rates hold, then it could help the current home owners to sell existing homes without substantial price cuts. After the tax credit of 00 expired the new home buying fell to a 13 year low. Even the underwriting standards are very strict, making it even harder to get home mortgages.
Falling rate encourage the new and the existing home owners to consider a purchase or refinance their mortgages triggering rebound in the down housing market. A 1% dip will reduce 5 on monthly payment of a 0,000 mortgage on the 30 year fixed mortgage. Almost half of the mortgage holders have 5.75% or higher rate and can take advantage of the rates now reducing their monthly payments tremendously.
In 2003 when rate fell to their lows the refinance activity triggered a .9 trillion business compared to .2 trillion last year. Many investors are flocking back to take the advantage of RATES and HISTORIC low real estate prices.
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Category: Rates
