Mortgage Rates Blasting Lower with Fed Cuts to Boot!
The way mortgage rates have dropped recently is really quite remarkable. We are witnessing par interest rates in un-chartered territory thanks to recent government moves and the action in the Treasury markets. I never thought we would see it, but the 10-year Treasury yield is nearing 2% as we speak! This is great news for those in position to refinance, as rates are as low as they have ever been. The mortgage spread premium is still quite high, but the mortgage-backed securities after market suggests that we may at least experience continued lender activity in the market.
Yesterday, the Fed announced another sharp rate cut. The Federal Reserve cut its federal funds rate target to a range of zero to 0.25 percent. This unprecedented move is aimed at boosting borrowing and lending amidst our current poor economic conditions.
Inflation numbers were released, and we are looking great in that area. Prices dropped by 1.9 percent, most likely due to the drop in oil prices.
Also, yesterday, the housing starts report was released and the numbers were dismal. New home starts fell to a seasonally adjusted annual rate of 625,000 from a downwardly revised level of 771,000 in October. That is a drop of 18.9 percent, the steepest since March 1984. The total is far below the 740,000 pace that Wall Street economists expected. Now, this may appear to be horrible news for the housing markets, but let’s take a positive spin. The report is indicating that the supply of new homes is decreasing, which can be great news for those selling homes and those that are refinancing. Couple a drastic cut in mortgage rates with a declining home supply and we could set up for positive days ahead on the home valuation front.
One of the biggest details blocking potentially positive refinance scenarios has been the value of homes. They are either knocking those refinancing out of the game or bringing loan-to-values too high to make a significant financial benefit for some.
All in all, I’d say the refinancing and mortgage markets are setting up for better days now and ahead. The bottom line is that refinancing home loan consumers stand to benefit in a big way with the current low rates, as long as they have decent credit and adequate equity in their homes.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
Yesterday, the Fed announced another sharp rate cut. The Federal Reserve cut its federal funds rate target to a range of zero to 0.25 percent. This unprecedented move is aimed at boosting borrowing and lending amidst our current poor economic conditions.
Inflation numbers were released, and we are looking great in that area. Prices dropped by 1.9 percent, most likely due to the drop in oil prices.
Also, yesterday, the housing starts report was released and the numbers were dismal. New home starts fell to a seasonally adjusted annual rate of 625,000 from a downwardly revised level of 771,000 in October. That is a drop of 18.9 percent, the steepest since March 1984. The total is far below the 740,000 pace that Wall Street economists expected. Now, this may appear to be horrible news for the housing markets, but let’s take a positive spin. The report is indicating that the supply of new homes is decreasing, which can be great news for those selling homes and those that are refinancing. Couple a drastic cut in mortgage rates with a declining home supply and we could set up for positive days ahead on the home valuation front.
One of the biggest details blocking potentially positive refinance scenarios has been the value of homes. They are either knocking those refinancing out of the game or bringing loan-to-values too high to make a significant financial benefit for some.
All in all, I’d say the refinancing and mortgage markets are setting up for better days now and ahead. The bottom line is that refinancing home loan consumers stand to benefit in a big way with the current low rates, as long as they have decent credit and adequate equity in their homes.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
Labels: business, credit scores, economy, finance, money, mortgage rates, refinance, refinance rates
posted by Jim Bisnett at
11:26 AM
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