Mortgage Rate Update: Rates Near 12-month Lows


800px-2012_mini_coupe_rear_r59-150x150An Olympia, Washington resident lives in a house with an 84 square foot floor plan, which is about a Mini Cooper Coupe crossed with a standard couch (right).

Dee Williams uses solar power to cover her electricity use, while eschewing the use of running water. Nor does she use a refrigerator. Check out a profile of her home on Zillow including pictures!).

And speaking of the smaller side of life… Pickleball is gaining popularity on the Central Coast. Pickleball is racket sport with a play space that look very similar to a tennis court – only much smaller. Paso Robles has installed five new pickelball courts at Centennial Park. The game is good for all ages! (Paso Robles Daily News).


All this about size, and we are really just talking perspective. Take mortgage rates, for example.

The 30-year fixed mortgage rate has retreated to its lowest level in 12 months, according to Freddie Mac’s weekly survey of lenders. At a national average of 4.12%, a 30-year fixed rate in the low-4.0% level would be a bargain for buyers who have sat on the fence while looking at a 30-year fixed in the mid-4.50s.

For qualified buyers willing to a pay 3/4 of a point in cost, Central Coast Lending is advertising a 30-year fixed rate at 4.000% (4.078% APR). The 15-year fixed has dropped to 3.000% (3.122% APR) for 5/8 of a point. For about one point in cost, we offer borrowers 3.375% (5.447% APR) for an FHA loan.

Despite all the drops, the average 30-year fixed is nearly 1.0% higher than the record 3.31% set in November of 2012. Size is all about perspective. Buyers with 30-year fixed in the 3.00% level had a historic opportunity. To them, today’s rates might seem high.

But let’s zoom out a bit. Rates have been relatively flat over the past 12 months:


Compared to the last 40-years of history, though, current rates are an amazing deal. See this graph of Freddie-reported 30-year fixed movement by Calculated Risk:


Sales activity reached a fever pitch in late-2012 and early-2013 due to the unique window of affordability offered by record low rates and bargain home prices.

Today, we hear quite a bit about the “slumping” housing market. Sales pace has slowed as: 1) mortgage rates have ticked higher, 2) inventory remains hard to find, and 3) lenders continue to maintain strict qualification standards.

Is there cause for concern? Well, let’s return to the perspective question. The 2001-2006 bubble years flowed with easy credit and skyrocketing prices. Today’s market is a different one. Competition is high for fewer properties, but on the bright side, 1) rates are much lower today, 2) loans are high quality and come in all shapes and sizes, 3) home prices are still below peak-bubble years.

A recent report by Black Knight Financial Services shows just how far we have come. Just 10% of borrowers are now “underwater” (owe more than their home is worth) compared to over 33% during the worst of the recession. Just 7.64% mortgage holders are delinquent or in foreclosure. In other words, today’s housing market is much more stable.

Give us a call at 805.543.LOAN or an email at info@CentralCoastLending for more information about mortgage finance, and to learn what you qualify for!