Mortgage rates remain far below economist’s predictions

Today’s mortgage rates remain far below economist’s predictions at the beginning of 2014. As we rang in the New Year, experts rang out an alarm saying the 30-year mortgage rate would rise to at least 5%. These economists based their warning on the Federal Reserve’s decision to cut back on a bond-buying program.
The Fed did reduce mortgage bond purchases to $20 billion a month, down from $40 billion when the program began in September 2012, which actually triggered investors to put their money into these safe, secure, high-quality bonds. The experts did not predict that the popularity of these bonds would positively effect home lending rates.
At the beginning of the year, the yield on a 10-year Treasury note was 3%. It has now slipped to about 2.6%. Lenders this month are offering 30-year fixed home loans at an average of 4.2%. That’s the lowest rate in six months.
The rates have fallen so low that they’ve triggered a mini-revival in refinancings, technically off-setting today’s lethargic demand for loans to buy homes. Another factor driving rates down is competition among lenders.
Some high qualified borrowers can get mortgage rates as low as 3.875% if they pay one discount point (1% of the loan amount) up front. Others with a down payment of 20% when they purchased their home, are shedding their mortgage insurance payments.
For more information on what these mortgage rates remaining far below expert’s predictions means for you, please call me at 805.886.9378 or email me at Cristal@montecito-estate.com. If you are searching for the perfect home in Santa Barbara, Montecito or Hope Ranch, please visit my comprehensive website. If you are considering selling your home in these or any of the surrounding communities, I am here to help.