Hello and welcome to this week’s edition of Moorings, your source where local and national mortgage and real estate news meet. As we do each week, let’s first take a look at interest rates and any movement from last week. Currently, a client who is looking to purchase or refinance a home with a conventional thirty year fixed rate mortgage can expect an interest rate of ONLY 3.5%. This is down by nearly a quarter percent from last week’s average and this is a great deal! A client looking at an FHA loan of up to 96.5% loan-to-value ratio can expect a rate of 3.25%. These are truly some of the lowest mortgage rates I have ever seen in the business and will likely be the lowest we ever see. I would implore anyone who has been sitting on the fence about refinancing, or even purchasing a new home, to do so now and call your preferred mortgage banker to discuss your options. There really has never been a better time to act.
In major economic news, last week, we saw a whole lot of action in the volatile financial markets thanks in large part to the Feds announcement of another round of Bond buying (known as Quantitative Easing or QE3). Evidence that our economy is still struggling was especially noticeable in the manufacturing sector last week. The New York State Manufacturing Index registered -10.41 in September (its lowest level since April 2009), while the Philly Fed Index showed that manufacturing in that region contracted for a fifth straight month in a row. The news wasn’t good on the labor front either, as last week’s stubbornly high Initial Jobless Claims reading of 382,000 was above expectations. However, there was some positive news on the housing front last week, as Existing Home Sales for August rose to a two-year high.
So what does all of this mean for home loan rates? Remember that negative economic news normally causes investors to move their money out of risky investments like Stocks and into safer investments like Bonds, including Mortgage Bonds (which home loan rates are based on). That’s why home loan rates often improve when our economy is struggling. Investors also tend to move their money into safe investments like our Bonds during times of global uncertainty, such as last week’s turmoil in the Middle East. These two factors, combined with the Feds QE3 Mortgage Bond purchases, all benefitted Bonds and home loan rates last week. Well that’s all for this week and until next week, Be Blessed and Numbers 6:24-26 be on you.