What a difference a week makes.
Last week, we saw rate costs become more expensive, prompting CCL loan officer Will Barnaby to write about the movement. At the time, he wrote:
“When investors feel that things are improving, money flows into stock and other higher return investments. When investors are fearful of losses money moves into bonds and securities. Rates benefit when investors are trying to protect themselves from losses in securities, and rates are negatively affected when the yield increases. Right now investors are feeling more secure and are moving money into equities and out of securities. As a result, rate costs are moving up.”
Well, this week rate costs have dropped, and significantly. The impetus is not the market (that is to say money flowing into equities)- as the Dow has currently moved above the 13,000 mark. Rather, rates are down due to concern about the impact of higher gas prices and uncertainty about the European debt situation. And if I had a penny for the number of times I have written “uncertainty about European debt” I would own a house by now. Take such concerns with a grain of salt.
Since the last time we checked in with a rate update (February 17), rate costs have improved by a half point for the 30-year fixed and nearly a point (!) for the 15-year fixed. This improvement matches the lowest rates we have seen this year and suggests you should call your loan officer to possibly lock in that rate. The best 30-year fixed rates are 3.375 percent (3.507 percent APR) and 3.500 percent (3.561 percent APR)
The 15 year fixed rate has shown notable improvement. We want to draw your attention to the 2.875 percent (3.078 percent APR) against the 3.000 percent (3.076 percent APR). The closing credit given to the 3.000 percent loan is large enough that the APR actually comes out lower here, despite the bigger note rate.
Make sure to check in with our website throughout the week. We will have our usual Market Updates and Professional Insight posts, as well as a feature on the Palm Theater in San Luis Obispo for our SLO County Locals blog.