In the past 2 months, the average 30-year fixed rate has increased from 3.50% on December 5 (2012) to 3.76% on February 6 (2013), according to Bankrate.com. During the same time period, the Freddie Mac index for the 30-year fixed has increased from 3.34% to 3.53%. The 30-year fixed rate reached a record low in November at 3.31%, according to the same Freddie Mac survey.
The Central Coast Lending 30-year fixed has moved up from 3.00%(3.091% APR) on December 6 (2012) up to 3.25% (3.351% APR) during February 7 (2013). Our published rates are well below such closely watched national averages, but we have experienced roughly similar increases in rate.
What has caused the upward movement?
For one, good economic news has influenced investors to dump U.S. Treasuries for higher-yielding equities, an action that correlates to higher mortgage rates. The market has moved behind solid earnings reports, improved housing data, and scattered (yet positive) employment reports, among many other considerations. Another factor is that the Fiscal Cliff is behind us. With such a large cause for uncertainty gone, markets have settled down.
There is also this to consider: rates were not going to simply languish at record lows forever. As the economy and housing market continue to show signs of improvement, mortgage rates were free to rise up from the all-time lows we saw.
Where will rates move in the future?
The Federal Reserve will continue with its stimulus measures, which means that mortgage rates have a built in source for downward pressure. Also to consider: the March 1, 2013 deadline. Congress dealt with the tax issue during the Fiscal Cliff deal, but kicked the U.S. government spending cuts down the road to March 1. As the U.S. government sets forth to deal with this issue, stocks could take a hit and mortgage rates could again improve.
It seems likely that rates will not remain at record lows, but they are still at extremely affordable levels, historically speaking. For example, to begin 2011 the average 30-year fixed rate was 4.76 percent, according to Freddie Mac. Coupled with low home prices, it is now more affordable than ever to purchase a home.
For our February 11 update, the Manufactured Conventional and Jumbo loans were moved downward 0.125% in rate, while the Manufactured FHA was moved up 0.125%. The rest of the loan programs saw their cost increase by about 1/8 of a point. The 30-year fixed is at 3.250% (3.372% APR) and the 15-year fixed is at 2.375% (2.614% APR). For more loan programs, go HERE.
To contact Central Coast Lending for a free, confidential loan pre qualification give us a call (805.543.LOAN), an email (firstname.lastname@example.org), or contact us through our website (www.centralcoastlending.com/contact).