Dec. 4, 2009 -- Mortgage rates have been easing a bit lately due to both softer demand for credit and, most recently, some flight-to-quality purchases of US Treasuries related to financing troubles at Dubai World, a state-backed corporation which asked to forego payments on its outstanding debts for at least six months. That is simply more fallout from the global financial crisis.
These troubles first came to light last Thursday. After initial concern, it seems Dubai World's effect on global finance markets is contained for the most part, so some of that move of cash into a safer haven has begun to unwind.
Some surprising economic news came late in the week, and if the again-influential yield on the 10-year Treasury is any indication, mortgage rates seem certain to rise in the days ahead. The 10-year Treasury rose from a Tuesday low of 3.21% to an estimated 3.48% by Friday's market close; mortgage rates haven't yet fully reflected all of that move, but from Tuesday's low of 4.83%, the all-important 30-year Conforming interest rate had risen to 5.06% by Friday.
For the week, HSH.com's FRMI, our overall average for mortgage rates (including conforming, jumbo and agency jumbo), fell by five basis points, closing the at 5.24%. Both conforming and jumbo rates declined this week, with conforming 30-year FRMs slipping to a 4.91% average. At the same time, the overall average for 5/1 Hybrid ARMs fell five-basis points, landing at 4.56% for the week. Some aggressively-priced 5/1 ARMs can now be found in the market with rates starting as low as the mid-3% range.
As you know, fluctuations in mortgage rates are a regular recurrence, and that rates rise much more quickly than they fall. This being the case, we always advise borrowers that when they've got a mortgage in place that makes their purchase or refinance deal work, they should lock in the interest rate, rather than trying to guess at any kind of bottom in the market.
30-year FRMS holding tightly to either side of a 5% threshold is a great deal, whether it's upper 4% or low 5% on the bottom line. Interest rates will kick a little higher next week, probably all the way back to (yawn) early November levels, when they were only outstanding.
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 DRE #01105052
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