IT'S 3:00 THURSDAY AFTERNOON - Do You Know What Your MORTGAGE RATE Is?
MORTGAGE INTEREST RATES TUMBLE IN RESPONSE TO FED RATE CUT, BUT HAVE SINCE BOUNCED BACK A BIT!
Last Tuesday afternoon, action by the Federal Reserve Board to cut it's benchmark Fed Funds Rate to a maximum of 0.25% had a near-immediate, positive impact on average mortgage interest rates. After the Fed announcement, at about 1:20 Chicago Time, average rates on 30-Year Fixed Rate Mortgages fell from last week's average of just over 5.6%, to 5.3%.
Yesterday, mortgage rates fell even further - to a 5.06% average - the lowest average in nearly 40 years! It was reported that some lenders dropped their fixed-rates on new home loans and mortgage re-fi's to under 5%!
In addition to the Fed Funds Rate Drop, the Fed cut its inter-bank Discount Rate in half - to 0.5%. Economic reports show inflation has declined, due mainly to the dramatic falloff in gasoline prices. Yields on long-term Treasury Bonds also tumbled. All of these developments predicted the average mortgage rate fall.
But the record levels were short lived!
Yesterday, some mortgage lenders changed their rates five times. Borrowers looking to lock in the lowest rate were often pre-empted as rates rose once again. Today, according to Bankrate.com, average 30-Year Fixed Mortgage Rates nationally stand at 5.28% - still very attractive, but the incredible lows!
Todd Gosden, a Senior Loan Originator with Avenue Mortgage in Naperville IL, blames credit and equity markets for rate volatility. "Right now, the volatility is like nothing I've ever seen," said Gosden.
It's also important to remember, unlike in the previous boon housing and mortgage market, the best interest rates go only to those with top credit scores and hefty down payments, or, in the case of re-fi mortgages, a high level of home equity. Those with more modest credit credentials, money down, or current home equity pay higher rates and fees.
For more, read Mary Ellen Podmolik's article in today's Chicago Tribune.
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