Home buyers benefit from Greek crisis as mortgage rates fall

By Palm Beach Business.com

DELRAY BEACH — The Greek debt crisis not only knocked down stocks substantially, it did the same to mortgage rates.

Freddie Mac’s Primary Mortgage Market Survey spotted the 30-year fixed-rate mortgage at 4.93 percent with an average 0.7 point, down from 5.00 percent a week ago. Despite the drop, the 30-year is still higher than it was a year ago, when it averaged 4.86 percent.
The Freddie Mac survey has not been below 4.93 since December 10, when the 30-year averaged 4.81 percent.

Bankrate’s national mortgage survey put the 30-year at 5.07 percent with 0.42 point, down from 5.12 percent a week ago.

Mortgage rates are closely associated with the 10-year Treasury bond. Yields on the 10-year dropped dramatically in reaction to the Greek debt crisis and the meltdown on Wall Street last week, from 3.80 percent on April 28 to 3.41 percent on May 6. By Wednesday, it was back up to 3.56 percent.

Bankrate said this cloud of global economic uncertainty likely gives the Federal Reserve even more latitude to hold the line on interest rates, so mortgage rates will stay a little lower, a little longer, than what was forecast just a few weeks ago.

The beneficiaries of all this: anyone buying, selling or refinancing a home.

"Interest rates on fixed-rate mortgage declined for the 5th straight week," Freddie Mac Chief Economist Frank Nothaft said. "The National Association of Realtors reported that median house prices are recovering in more local areas in the latest quarter. On a year-over-year basis for the 152 areas the association reports on, 91 metropolitan areas had positive growth in the first quarter of this year. This compares to 67 areas showing positive annual growth in the fourth quarter of 2009 and only 30 cities in the third quarter of last year."

And if Bankrate’s panel of mortgage experts is to believed, rates are likely to stay low at least for the next week or so. Nearly two-thirds — 64 percent of Bankrate’s Rate Trend Index — see mortgage rates treading water for the next week or so, while 29 percent see rates rising. Only 7 percent see rates falling further.

Freddie Mac’s survey found the 15-year mortgage averaging 4.30 percent with an average 0.6 point, down from last week’s 4.36 percent.  Bankrate put it at 4.45 percent with 0.39 point.

The five-year adjustable-rate mortgage averaged 3.95 percent this week, with an average 0.6 point, down from last week’s 3.97 percent, according to Freddie Mac. That’s the lowest the ARM has averaged since Freddie Mac began tracking it in 2005. Bankrate found the ARM at 4.27 percent with 0.35 percent.

 

 

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