Anybody who follows the Real Estate Industry knows by now that Mortgage Rates have fallen this week. For the moment, mortgage rates are holding closer to 2014 lows than highs according to Frank Nothaft, Freddie’s chief economist.
With a slow start to 2014, many industry leaders say that the brutal wintery weather in other parts of the country may have contributed to the decrease in rates. High rates have plagued the market since last summer when the average on a 30 year fixed went from 3.5 percent to 4.5 percent. However, with the return to low interest rates, refinance applications are down according to the Mortgage Bankers Association. With many homeowners refinancing the last 2 1/2 years and this new drop in rates may not bring any new refi – applications, since it may not make much of a difference. Additionally applications to purchase a home were down 14 percent. So the new falling rates have not increased sales the 1st quarter of 2014.
The question now becomes how far will the rates continue to fall, or could this be a momentary blip? Many economist had expected the rates to surge higher by now due to the so-called taper by the Federal Reserve, but that has not happened. Many big banks have eased up their lending guidelines. Banks such as Wells Fargo, recently announced that they would offer loans to borrowers with FICO credit scores as low as 600, but only as FHA loans since they are backed with government insurance.
With rates down, it may not provide much juice in the refi-market , however this could push some potential homebuyers who have been on the fence to buy now and not put it off for better rates. With many places experiencing low inventory, this may now be the right time to buy.
But rest assured as the winter weather begins to wear off, mortgage rates will begin to firm up once again.
Luckily, here in El Paso the weather has not been a major impact. But nonetheless, the overall market will continue to improve and home prices will continue to rise as well.
Published on 2014-04-07 15:23:16
