Lower Rates are like Holiday gifts to the housing industry. And the housing industry really didn’t expect it. We are speaking of the holiday gifts with the timing of lower interest rates.
Now, we do not talk much at Palm State Mortgage Company about the rise and fall of higher or lower mortgage rates. It can give mortgage hunters a false sense of the market. Rate percentages speak in generalities and lower interest rates do not always mean the same thing to every mortgage client. What means more in the final analysis of the mortgage deal is the buyer’s general fiscal health.
We See Lower Rates -Well Timed For the Season of Gifts—
But Housing Industry has gotten some holiday gifts and a shot in the arm recently. So, we do report on the mortgage rates in general once in a while. It is significant right now because suddenly the rates have dropped to a two month low.
To the Housing Industry with Love
We have always been aware that December was the slow month for the housing market. We also have recently explained how nice that was for house hunters. They liked the slower pace of housing industry. They saw much less competition and beautiful buys and better services for the industry .
Meanwhile, prices have certainly been easing and there is much less competition for beautiful buys. And the frosting on the cake is the new low in interest rates.
Vacillating and uncommitted buyers are seeing these points plus the new low in rates. It’s just enough to transform undecided buyers into homeowners.
Deck the Halls With Falling Rates Now!
If you were a “wavering” buyer, you knew December is the slowest month for the housing market, home price gains have been easing and competition is lower.
The most recent drop in rates has suddenly put some indecisive buyers jumping back in. Look at the comment of Todd Probasco, VP mortgage sales manager at Lakeside Bank in Chicago:
“We have not seen an increase in refinances. But we have seen a jump in buyers applying for new mortgages…”
And he added, “These folks may have been people who were not sure if they were ready to buy, but now they are.” Meanwhile, let’s Deck the Halls with Falling Rates!
(We can’t resist saying that we love to see things like this happen when we are accused of being overly optimistic in our blogging outlook.)
Plain Facts and Figures of the Matter of Lower Rates
So, now that we have unwrapped the gift for the housing industry, let’s see what lower rates really means to basic home buyers.
The housing industry reports the average rate on the popular 30-year fixed has fallen 21 basis points in the past week. We went from 4.94 percent to 4.73 percent on last Thursday. Read on to discover what that means to you
- Note that this rate only works if you have good credit and pay a strong down payment.
- The drop comes after the 30-year fixed hit a recent eight-year high of 5.05 percent at the start of November. See the lower rate!
- Likewise, the average rate for 15-year FRM declined by 9 basis points to 4.41 percent.
- Here’s the gift: Points decreased to 0.44 from 0.60. In the words of the Mortgage News, “Adjustable rate mortgages (ARMs) also saw increased activity during the week; the share of applications increased to 7.6 percent of the total from 7.2 percent.” Behold, a lower rate!
To quote the Mortgage News Daily, “The average rate for the 5/1 ARM declined to an average of 4.24 percent with 0.34 point from 4.33 percent with 0.21 point the previous week and the effective rate moved lower.” Ring those bells for another lower rate! Another Gift to the Housing Industry!
Points to Ponder: Is the Housing Industry Gift of Lower Rate also Good for Average House Hunters?
With the “mortgage rates falling sharply,” we are seeing investors head to the relative bond market while buyers are heading to the housing industry.
Mortgage News Daily reported today, Dec. 12, “Borrower activity continued to pick up last week as interest rates retreated to September levels and mortgage applications extended their recent winning streak. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, increased 1.6 percent on a seasonally adjusted basis during the week ended December 7.”
If you are a house hunter, be aware that “Lenders are going to vary a bit, both in general, and specifically with respect to recent volatility,” said Matthew Graham, chief operating officer at Mortgage News Daily. “The important measurement is the change from the recent highs.”
So, where are we in that regard? The lenders are about 3/8ths of a percentage point lower in rate than they were a month ago. Read below to see what that means. You may be pleased, as a house hunter.
Can You Put That in Dollars and Cents Please?
To put it in dollars and cents, for some of you home-buyers that could mean about a $70.00 savings per month on your $300,000 mortgage. This means over what you would have paid if you had bought in November. So, Happy Holidays!
- The average rate on the popular 30-year fixed has fallen 19 basis points in the past week, from 4.94 percent to 4.75 percent on Thursday, according to Mortgage News Daily.
- The drop comes after the 30-year fixed hit a recent eight-year high of 5.05 percent at the start of November.
Jingle Bells Ring and Mortgage Rates Fall
In October, Fannie Mae surveyed consumers about rising rates. And they stated they “doubted mortgage rates would decrease next year…” Likewise home-builders were getting discouraged in October. But now….well there is this little gift of lower rates, like the jingle bells of optimism. So, if you are a December house hunter, come on into to Palm State Mortgage. Let’s take a look at these lower rates and see what this gift to the housing industry could mean to you.