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Mortgage rates dive down this week

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When the fed increased interest rates recently, many panicked as they believed mortgage rates would be higher, but that’s not the case this week for fixed-rate mortgages.

Fixed-rate mortgage interest rates took a nosedive this week, with the 30-year fixed ending the week at 6.08 percent, falling 22 basis points from last week’s average. The 15-year fixed ended the week at 5.48 percent, down 23 basis points from last week. The one-year adjustable rate mortgage slipped to 4.33 percent, diving 10 basis points lower from last week.

I predicted this would happen due to the Fed’s rate increase when I was speaking with a mortgage lender I know earlier this week. The Fed’s move to increase was to curb inflation, according to Alan Greenspan, and it appears that the rate increase curbed the inflation of interest rates, possibly more than anything else.

Many experts attribute the rate drop to the low number of jobs created during the same economic cycle, which is certainly a possibility, but definitely not the only factor.

David Berson, Fannie Mae’s chief economist, said there’s a larger indicator at work. He said that the rate drop, occurring after the Fed increased rates, occurred due to a “brief pause” in the economy, meaning that there was a pause in economic growth this week.

Berson’s argument seems to make the most sense of the ones put forward by most economists, and while retail sectors did not see much action this week, home sales appear to have continued to knock down doors, which they likely will continue to do next week with rates much lower than last week.

Information from Freddie Mac and Bankrate.com was used for this report.

-John Mudd
“Mr. Real Estate”

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About Mr. Real Estate

  • http://allamericaninvestor.blogspot.com Robert T DeMarco

    Mr Real Estate..

    First, I think you are doing a nice job on Blog Critics. I find your “posts” informative and worth a quick read.

    Here are a couple of questions for you. What percent of current condominium buyers do you think are speculators? Are rents going up or down over in Largo?

    Bob

  • http://insiderealestatejournal.blogspot.com Mr. Real Estate

    Hi Bob,

    Thanks so much for your kind words. I am not certain as to what percentage of buyers are speculators, but I am sure that there are some out there. Most condo buyers I come into contact with, though, are looking to purchase a nice beach vacation condo.

    Rents are usually based on a property’s location, so it would be unfair to say that rents are going up in Largo, because Largo covers quite a few locations, however, if you look throughout Tampa Bay you will notice that a condo that rented for $600 in the late 1990s will rent easily for $900 now in most cases, but not necessarily all.

  • http://allamericaninvestor.blogspot.com Robert T DeMarco

    Thanks for the feedback. I am working on an article about the housing market for one of my blogs. I have a source that says 50 percent of condo buyers right now are “speculators.” Really meaning they are looking to flip the contract. I don’t believe that figure. I did notice down here where my mother lives in Delray Beach there were buyers waiting to get into her property. I talked to the pres and he said there are six for sale right now and they are not moving. That is interesting.

    bob

  • http://insiderealestatejournal.blogspot.com Mr. Real Estate

    Some investors like to buy new construction at pre-construction prices so they can flip the condo after construction’s completed for a profit. Other than that I’m not aware of any condo flippers. Most condo investors I know like to buy and rent out the units. Lately I’ve been working with some commercial groups who like to buy shopping centers. It’s really interesting work.

    All I know about Delray Beach is that it’s where Ms. Mary Carey’s business is located. I’m not very familiar with its real estate market. I’m somewhat familiar with Boca and a few other South Florida areas, though.

    If you quote me on anything, please link it to my blog. Thanks!

  • http://www.hotmortgageloans.com First Time Home Buyer

    Personally, I think the mortgage industry is headed for major recession.

  • http://www.usamortgagehouse.com FHALoan Programs

    I agree! To many credit challenged home buyers are getting easy underwriting and that’s going to catch up with the industry fast.

  • http://www.mortgage-movers.com Jumbo Home Loans

    I doubt that. I specialize in Jumbo loans and there seems to be a lot of money rolling out in the economy. I would worry about property values sky rocketing.

  • http://www.fhahomeloanmortgage.com FHA Home Loan Programs

    I see a lot of the same things mentioned before. My FHA clients could easily have been placed into high risk, high default Sub-Prime products and we all know defaults are at record levels already.

  • http://www.2valoans.com VA Loan Programs

    I’ve seen a tightening of credit in the VA lending market. It’s getting tough to get those approvals for difficult credit.

  • http://www.avaloan.com A VA Loan

    You need to check you packaging and presentation for your VA loan clients. A lot of declines with difficult credit can be traced back to presentation and packaging. You need to tell a story and not make an underwriter look everywhere for documents. That’s a quick way to get your clients loan declined.

  • Eric Olsen

    Um, why are you having a conversation with yourself? Are you the guy in “Identity”?

  • http://www.insiderealestatejournal.blogspot.com Mr. Real Estate

    Eric, he’s posting the same “conversation” to several of my posts on mortgages. Looks like he’s spamming to me. Spamming the comments is not cool. No one gets any business from me when spamming, hint hint.

  • Eric Olsen

    he’s banned

  • Eric Olsen

    for talking to himself and being boring about it

  • http://w6daily.winn.com/ Phillip Winn

    And of course, his URLs are wrapped in ‘nofollow’ and also bounced through a non-indexed redirector, so he doesn’t get any SE ranking help from them anyway. :-)