Mortgage rates love a Greek tragedyby Tim Manni
Mortgage rates love a Greek tragedy, or any other economic tragedy for that matter.
As political leaders and financial systems in Greece and Italy fight to stay afloat (and in office), investors have once again turned their sights to the stability that U.S. Treasuries provide. Economic stress, while harmful to the overall financial system, provides renewed opportunities for homebuyers and refinancers.
The case held true last week as mortgage rates declined on every type of home loan thanks to the wobbly economy here and abroad.
Mortgage rates decline
According to the latest figures from HSH.com, the overall average rate for 30-year fixed-rate mortgages–a combined average of conforming, non-conforming and jumbo loans–eased by nine basis points (0.09 percent) from the previous week, slipping to an average 4.36 percent, the lowest reading in a month’s time.
The same combined average, but for 15-year loans, closed the week with an eight basis point decline to 3.66 percent.
FHA-backed mortgages, a saving grace for many homebuyers and low-equity-stake refinancers in today’s market, shed seven hundredths of a percentage point to land a 3.93 percent, a new record low. The overall average for 5/1 Hybrid ARMs dropped by five basis points to 3.11 percent.
How will this story end?
At this point, we don’t know how this current economic story will end. Will it resemble the dark conclusion of a Shakespearean tragedy, or the happy ending of one of his comedies? I guess it all depends on who you ask.
While underwater homeowners are eagerly awaiting the details of an expanded federal refinance effort (due out Nov. 15), the economic woes which are putting the screws to so many here and abroad should continue to put downward pressure on mortgage rates as the enhanced refinance effort begins.
Even though the U.S. economy has shown signs of improvement lately, the residual effects from instability overseas and grim forecasts from the Federal Reserve (unemployment and the GDP) are keeping expectations low and consumer confidence at a minimum.
What ahead for this week?
In the latest issue of our Market Trends newsletter, HSH.com VP Keith Gumbinger says potential refinancers may want to strike before the new program kicks off.
“Opportunities to finance or refinance remain strong, and if you are so inclined, you might do well to get your loan in process before month’s end, when at least a minor crush of refinancing is to be expected due to the expansion of the HARP program.”
We expect low mortgage rates to continue this week, so if you’re ready and able to refinance, do so before countless other try and do the same thing.