In December, 2013 there was a slump in the sale of new homes. This was caused by reports doing round that the economic recovery was not doing as well as expected and was, in fact, weakening. This has resulted in mortgage rates decreasing for many popular loans. Another study has not helped matters any. It showed a drop in home prices in November, 2013 for four weeks running.
The two reports have reinforced the opinion of some experts that home prices cannot see a large upswing in the short-term. The weak state of housing market and the downtrend in economy seem to play a part in their conclusion. However, mortgage rates will see a surge in the long-term in 2014.
30-year fixed loans saw a dip in the average rate this week from 4.39% to 4.32% as indicated the latest survey from Freddie Mac, the mortgage buyer. The rate was 4.51% on an average one month ago. The rate for a 30-year fixed rate loan a year ago was 3.53%. It is 0.79% less than today’s rate.
In its fourth consecutive decline, a 15-year fixed loan also saw a decline in the average rate. That is a reduction of 0.04% at 3.44% from 3.40%. A year ago it was 2.81% and the average a month ago was 3.56%.
Reports indicated the hybrid adjustable-rate mortgages on average were mixed. A week ago, the 5-year ARM went for a slight increase but went down from 3.15% to 3.12%.
Averages on hybrid adjustable-rate mortgages were mixed. After seeing a slight increase a week ago, the average for the five-year ARM fell to 3.12 percent from 3.15 percent. The one-year ARM registered a slight rise settled at 2.55 percent from last week’s 2.54 percent.
In December, new home sales dropped to 7% which somewhat eased mortgage rates. This made seasonal adjustment possible at a pace of 414,000 units which was below the consensus. This was disclosed by Frank Nothaft, the Chief Economist at Freddie Mac in a statement. He further stated that there was a decline of 0.1% in November -the first since November 2012 – in the S&P/Case-shiller price index in respect of 20 cities.
The bond-buying stimulus program is sought to be curbed by the Federal Reserve in January and the announcement had made mortgage rates rise steadily. Recent concerns that a dramatic escalation in home prices will not be supported by the market, however, have eased rates.
Federal Reserve’s bond-purchase plan has helped dramatic gains to come to terms with real estate prices thereby keeping affordability elevated even as stabilization takes place in the market. Housing market, by and large, continues with showing signs of recovery though recent economic reporting has not been very encouraging.
The latest Mortgage rate Trend index put out by Bankrate.com, carries the opinion of analysts in the field 42% of whom believe that mortgage rates will to come down during next week. 29% of the polled experts think that the rates will see no change.
Mortgage banker for Baltimore’s WCS Funding group, Michael Becker says that the markets’ view has changed to accommodate a ‘risk off’ perspective by the emerging markets possessing a weakness over the last week. In the event, treasures have taken to a flight to safety and are benefiting from it. Bond yields and mortgage rates are coming down. This may well continue for some time to come. Lower rates will be the result that is expected to get currency in the coming week.
James Pallot is a buyer for a family owned food importing business in Sydney. He rents a container building to use as storage all year round like sturdy blast resistant buildings.