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30 Year Fixed Rates Hit 14 Month Low
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June 9, 2005 LOS ANGELES -- When analyzing the home
loan interest rate market today, for some reason that
bunny rabbit on the infamous battery commercial who "keeps going and going..."
comes to mind.
Metaphors aside: On Thursday we saw another drop in
30 year fixed rates for
mortgages making the national average for benchmark dip down to the 5.56% mark.
This is the lowest level 30 year fixed rates
have experienced in the past 14 months. Makes you want to hum a song from early
2004, doesn't it? I recommend Pink Floyd's "Money", as that is what homeowners
will save a boatload-of if they are smart enough to lock rates now before the
sun goes away.
Thursday's plummet lands the 30-year at only 1/4 of a point
above the all-2004 low level. The lowest interest rate for this type of loan
program back in 2004 was 5.38 percent, on a national average basis.
The low level we are seeing for the big 30 is nearly
eye-to-eye in the face of the Federal Reserve's hammerlock on short-term
interest rates, and economists around the country are a bit dumbfounded, to say
the very least.
Freddie Mac's chief economist and mouthpiece Frank Nothaft
said Thursday that he is shelving his early-2005 forecast that rates would
continue to climb in harmony for the entire year based upon the Fed's commitment
to gradually and measurably raise rates in a campaign to roadblock inflation.
His revision stated that by the end of this year, he sees rates sitting
comfortably at the high-fives to very low sixes. Most prediction experts inked
their forecasts confidently that by year's end
interest rates would be floating stably
at the 6.5% mark. Just goes to show that the meteorologist on you favorite news
channel isn't the only one who can't seem to put a fine point on his outlook.
Being the mortgage industry authority that it
is, it comes as no shock that when Freddie Mac mouthpieces speak, people
countrywide with financial interests in real estate perk-up forthright to get a
listen.
Freddie Mac's weekly interest rate survey reveals that the
average 15-year fixed mortgage rate dropped to 5.14 percent from 5.2% the week
prior.
Naturally, when rates do a triple-lindy dive like they are,
homeowners prepare immediately to get wet. Translated, that means that
refinancing volume should be hitting the roof tomorrow. My
guess is that an astronomical number of homeowners will be in a position to refi
once again and have it be a worthwhile cause, even if there are costs and
penalties involved.
The Mortgage Bankers Association, or MBA, released a statement
indicating that mortgage application volume stole 43% of the market share in the
past week. That is the greatest percentage of the application volume refinance
candidates have seen in the past 90 days.
Adjustable-rate
mortgage volume has dropped, which is to be expected when rates for fixed
interest home loans are as low as presently.
There are many revisions about to come forth regarding
home-sales forecasts for this year in the wake of these low rates. The NAR
(National Association of Realtors) made a revision this week to its prediction
for home purchase volume in favor of an upward swing. Belief by their economists
is that records will be broken once-again this year with regard to residential
property sales. This is a complete 180 from their recent indication that home
sales volume would see a minimum 2% stymie in 2005. - By
Stockton Marquette,
Mortgage Industry Analyst and Forecaster.
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