Interest Rates Remain “Stuck” at Record Low
Amazing how cheap money is these days and those buyers able to qualify and those who haven’t refinanced are negotiating some fantastic bargains. Keep in mind that we have never had rates this low in the half century plus that long-term mortgages have been around. While the chances of any significant further declines in property values are slim some buyers are still fence sitting but it is hard to figure out why. Keep in mind that historically real estate in the United States during the post war era have increased in value an average of 4% annually we now have prices that are 20% below these historical trends. Never has been the timing been better to find your dream home, borrow as much as you can, and stay put for 10 to 15 years or longer. Those able to find the ideal abode and live happily ever after for the term of a 30 year fixed mortgage will never be sorry at today’s prices and rates. This truly is the perfect storm in the south Florid real estate market if there ever has been one.
As of this morning, the average overnight rate for a fixed 30-year mortgage as reported by Bankrate.com is at 3.85% down 4 basis points from where we stood seven days ago. This marks the 10th week out of the past 14 where rates have either dropped or stayed flat and ties the record all time record low for 30 year fixed notes set just two weeks ago. The benchmark 15 year fixed rate was at 3.14% down 7 basis points from last weeks level while the benchmark 5/1 adjustable rate mortgage dropped 4 basis points to 2.84% from 2.88% where they stood 7 days ago. While rates at historic levels there is certainly the chance with the worldwide economic turmoil for investors to continue their love affair with US bonds and rates could dip even lower. However any significant decrease seems very unlikely unless banks decide they do not need to profit from their cost of borrowing and servicing loans.
We continue to see some growth in Gross Domestic Product, interest rates remain at record low levels and recently some positive growth in employment. All good news for the south Florida real estate market but can we keep the recovery underway is the big question.