Good news for Home Buyers! Mortgage Rates Fall!

After the Federal Reserve announced this week that its $85 billion per month bond-buying program will remain, mortgage rates dived.

 

The program had helped keep mortgage rates low, but fears mounted this summer that the Fed would begin winding it down. This caused mortgage rates to move up, increasing borrowing costs for home buyers and slowing the recovery of the housing  market.

 

The Fed’s decision has reinforced its commitment to holding short-term interest rates near zero through next year and into 2015. The Fed noted that employment is improving, and is optimistic about the “growing underlying strength in the broader economy.”

 

Here are Freddie Mac's reports of mortgage rates for the week ending Oct. 31: 

 

Type of Mortgage	Today’s Rate 10/31/13	Last Week 10/24/13	October 2012
30-Year Fixed	4.10%	4.13%	3.39%
15-Year Fixed	3.20%	3.24%	2.70%
5-Year ARM	2.96%	3.00%	2.74%
1-Year ARM	2.64%	2.60%	2.58%

The Fed's decision should help sustain low mortgage rates in the near future, says Frank Nothaft, Freddie Mac’s chief economist.

 

That's good news for home buyers and sellers!

 

Courtesy: Realtor Magazine

 

Looking for a home? Check out all homes for sale in Columbia and Lexington at www.homesincolumbiasc.net

 

Want to know what your home is worth? Call me at 803-348-9922 or email me at vsashikant@gmail.com.

 

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Knee-jerk Reaction by Home Mortgage Interest Rates

With the Fed’s announcement last week that there may be a tapering of its bond purchase program sooner than later, stock market indices reacted by dipping by a few hundred points. A stock that I had bought with careful thought also took a dive! As an aside, the minute I buy a stock (a meager 100 shares), its price will go down!

With the Fed's announcement, home mortgage interest rates jumped up. This was to be expected – interest rates had been ridiculously low at around 3.5% for over a year. According to Freddie Mac, interest rate for 30-year fixed mortgages took ‘its biggest leap in 26 years’ from 3.93 percent last week to 4.46 percent!

"Higher mortgage rates may dampen some housing market activity but the effect will be muted by the high level of buyer affordability, and home sales should remain strong,” says Frank Nothaft, Freddie Mac’s chief economist. 

I don’t see how there can be a higher level of affordability. For the same monthly payment of principal and interest, home buyers will now afford a slightly smaller home (or lower priced home). But what will happen is that home buyers who were vacillating will be galvanized into action with the fear that interest rates may go up further.

 

With all the knee-jerking that’s going on, we might as well be watching the cancan at the Moulin Rouge!