Year in Review: Mortgage interest rates fall across the board

As the end of the year approaches, we are beginning to look back over 2012 and think about how the real estate market and home finance has changed and evolved.

Here is something with a noticeable difference: mortgage rates.

The national average of the benchmark 30-year fixed rate rose 0.02 percent to 3.34 percent during the December 14 week according toFreddie Mac’s Primary Mortgage Market Survey. The survey noted that the average at this time last year was 3.94 percent. Roughly, this means that rates have dropped on average about 0.60 percent throughout the year – a large fall that ultimately hit record lows.

Mortgage rates have tumbled to record lows in part because demand for U.S. Treasury bonds has elevated throughout the year.

U.S. government bonds are viewed as a “safe haven” by investors. As demand for government bonds increases, their price increases and the “yield” at which they pay our drops. The 10-year Treasury yield has a direct relationship to the 30-year fixed mortgage rate. So when demand for the 10-year bond is high, its yield drops, and mortgage rates feel downward pressure.

With the European debt crisis and concern about the strength of the U.S. economy, investors have bough U.S. Treasury bonds in mass to avoid riskier securities.

The U.S. Federal Reserve has also played its part in lowering mortgage rates. Fed stimulus action has purchased rounds of U.S. Treasuries and mortgage-backed securities in moves called quantitative easing (QE), which has kept demand elevated. In QE4 announced this week, the Fed said it would keep rates low until unemployment has reached at least 6.6 percent, which isn’t expected to happen until late 2014 or 2015.

Central Coast Lending rates have dropped well below the national average. Our 30-year fixed is currently listed at 3.000 percent (3.111 percent APR). For December 17 mortgage rates, see HERE.

New Listing! 1270 Vista Del Lago, San Luis Obispo


Beautiful single-level home nestled in a lovely, well-kept neighborhood right across the street from a cute little park! Front yard landscaping is maintained by the HOA for this completely detached PUD. Large, sunny back yard is excellent for your raised-bed garden and outdoor entertaining. Additional room in the garage is great for an office but can be removed upon request. Clean and ready for a new owner, you’ll want to call your agent and set up an appointment to view immediately!

New Listing! 9610 Nacimiento Lake Dr. Paso Robles


Beautiful equestrian ranch property with a dressage training and showing arena. Pride of ownership describes this warm and inviting spacious home – with 4 bedrooms, 4 bathrooms, 2 fireplaces, wrap-around porches, and swimming pool. The property also includes an 8 stall state-of-the-art barn with an unfinished loft. There are many wonderful riding trails including those with direct access to Lake Nacimiento. You are 20 minutes to the charming town of Paso Robles and a short distance from over 200 wineries. This property is the quintessential living for outdoor enthusiasts and just minutes from Lake Nacimiento. Come live the dream!

Click here for more details.

Wine Bar Music in Paso!

Music lovers thrill to find cozy, relaxed places to hear live music. Last Sunday at Lombardi’s wine bar on 11th and Park in Paso was one of these special settings.  Wally Barnick brought his handsomely fluid voice, obvious love of music and his guitar in from Big Sur. From old-time cowboy tunes to Buffalo Springfield and John Sebastian, Wally knows music. Perfect evening but then something extra special occurred about halfway through the evening when the deep and dreamy voice of Monte Mills could be heard in harmony.  Of course it didn’t hurt that we were sipping yummy local red wine and spoiling ourselves with the comfort of Liz’s fab food….my favorite is the Gorgonzola Pesto Pizza with her house salad. Don’t know if this evening can be repeated but Wally will be back this Thursday (12/13) from 5:30 to 8:30 and Sunday (12/16) from 5 to 8pm. Call (805) 237-7786  for more info.

Federal Reserve stimulus action should keep mortgage rates near record lows

The U.S. Federal Reserve begins its two-day meeting as board members will discuss the continuation of stimulus measures. The Federal Open Market Committee (FOMC) will continue with its $40 billion per month purchases of mortgage-backed securities, and likely increase its monthly purchases of Treasuries as Operation Twist is set to expire.

Forgive us for all of that jargon. The point is this – when the Federal Reserve ramps up purchases of Treasuries and mortgage-backed securities, mortgage rates tend to fall. The action puts downward pressure on bond yields, and when the 10-year Treasury yield drops, so does the 30-year fixed.

Again, forgive us for all the jargon. Here is something that we can say clearly: mortgage rates should remain at or near record lows in the lead up to the fiscal cliff.

In November, the U.S. unemployment rate fell to 7.7 percent as payrolls added 146,000 jobs. The rate also dropped in part because 350,000 people left the work force. Construction jobs fell 20,000 during November, which comes as somewhat of a surprise after evidence (such as housing starts) points to increased construction activity.

The latest Keith Byrd market report shows San Luis Obispo County single-family residential homes selling at their fastest pace since 2005. Through the first 11 months of the year, their have been 2,587 total single-family residential home sales. Normal home sales account for 70.6 percent of all activity and short sale activity took up a greater share of the market with 19.4 percent of all sales. For more, please see our article “San Luis Obispo County homes selling at fastest pace since 2005.”

Mortgage rates shot downward on Thursday to the lowest levels of the year. Then on Monday, many of them jumped back to previous levels. For More, see our December 10, 2012 rate update.

Lastly, we would like to notify readers of our latest service – the CCL Mortgage Rate Tracker. Subscribe to this free service to receive the latest mortgage rates to your inbox. The Tracker follows 10 loan programs (including conventional fixed, FHA, USDA, VA, jumbo, and manufactured loans) and sends along mortgage rates for points, par, and rebate options. This is an easy way to follow the latest on mortgage rate movement. Email with the text “subscribe” to join the mailing list.