Monday, May 27, 2013

Real Estate Economics 05/27/2013



An ugly week in the MBS market has moved mortgage rates up.  Statements by the Fed and its leader, Ben Bernanke, regarding the time frame for easing back on the MBS stimulus known as QE, were considered by investors to be a thumbs up on current economic growth.  Essentially, if the Fed is so optimistic about the speed of recovery, that it's willing to pull back on the stimulus much earlier than previously indicated; then investors definitely want to be taking advantage of the potential increases in the stock markets.  So, they moved their investment funds from the bond markets to stocks, which drove the bond markets down and interest rates up.

That's an extreme simplification of what went on this week, but how much do you really want to know?!  A reality check is due, and it's likely that mortgage rates could get somewhat better over the coming weeks.  Maybe not a lot better, but better.  Our economic growth rate is not stellar, and there is still no fear of inflation, so many analysts expect to see the Fed continue its stimulus efforts.  However, markets will bounce on every word from that group, and every word will be scrutinized more closely as time goes on.

On the fun side, I've attached a colorful Housing Market comparison graphic that may be of interest.  It shows the fall and rise of housing prices from 2009, 2011, and 2013 across the country.  It may be helpful in convincing your buyers and sellers to do something sooner rather than later.  The percentage of loss or gain shown is a 2 year comparison.  So, the first one shows home prices declining an average of 17.6% from March of 2007 to March of 2009, and so on.

The following rates are based on 30 day locks with no discount points and credit scores of 740 or better, as of this morning.  The 30 Yr Fixed Non-Owner rate is based on 25% down payment.  This is where the best rates come in for investors


Rate
APR
30 year fixed conforming =
3.875%
3.932%
15 year =
3.250%
3.341%
3/1 ARM =
3.125%
3.194%
FHA/VA 30 year fixed =
3.750%
4.717%
30 Yr Fixed Non-Owner =
4.500%
4.588%
Prime rate is currently =
3.250%


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