A few weeks ago, mortgage rates flared higher, climbing from still-economic-emergency levels. The rise came amid what was interpreted to be signals of an improving economic outlook, the potential for inflation, pondering over what the Federal Reserve and Treasury would do and rampant government spending, among other factors.
Over the past couple of weeks, those fears and concerns have run straight into a fairly stark reality: The economy remains weak, if less so than earlier this year; the Federal Reserve and Treasury have provided no indication that the announced programs to support the economy will change in one way or the other and inflation remains largely a down-the-road concern.
As a result, mortgage interest rates have settled back in their typical slow, wary fashion from highs reached in mid-June.
The overall average for 30-year fixed-rate mortgages of all stripes -- measured by HSH's Fixed-Rate Mortgage Indicator -- declined by nine basis points (.09%) this week, closing at 5.81%. The holiday-shorted week saw the average rate for the FRMI's 5/1 Hybrid ARM counterpart also ease back by nine basis points, closing at 5.22%. Conforming 30-year FRMs declined by eleven basis points, stopping at their lowest average since the week ending June 5.
Although there is little doubt that we have bounced off the bottom economically, those looking for some sort of quickly accelerating improvement will need to keep looking.
Rates have eased back because the economy has done so. The fact is, if you want substantially lower mortgage rates you'll need to wish for an even slower growth pattern, and that's probably not among the best thing to want at this point.
It's very possible that, after that late spring low-to-high flare that we've got to our focal point for the Summer, and rates may hang around these levels more or less until after Labor day. It's too soon to call "summer doldrums" just yet, but not that early. Rates probably take a little vacation of their own next week, with little movement expected.
For More Information
Please contact me if you'd like more information about our community or real estate market:
Walter Stauss, Lifestyles Real Estate
500 Seabright Avenue, Santa Cruz, California 95062
Cell: 831.246.4663, Email: walter@831.com, Web: http://www.831.com
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