Interest rates up for only the 2nd time in 12 weeks
As the local real estate market continues to gain steam it is certainly interesting to watch what is happening to interest rates. While they stay at artificially depressed levels there is no doubt the main cause is the anemic growth in the overall economy which over the long term certainly is not good news for housing. To date the real estate market in south Florida seems to be impervious to the larger economic picture as inventory levels continue to drop and buyers have fewer choices and higher prices staring them right between the eyes.
As of this morning, the average overnight rate for a fixed 30-year mortgage as reported by Bankrate.com was at 3.67% up 5 basis points from where we stood one week ago today. The benchmark 15 year fixed rate is at 3.04% up 7 basis points from last weeks level while the benchmark 5/1 adjustable rate mortgage jumped to 2.72% from 2.68%. This was on the heels of 4 straight weeks of falling rates and only the 2nd time in 12 weeks were rates have increased. Where we go from here is anyone’s guess but the FED seems very content keeping rates at crazy low levels.
Most “experts” expect rates to not move too much in either direction at least through the election coming our way in November. No doubt the Fed’s recent decision to keep on buying our government bond plays a huge roll and this program has been dubbed “Operation Twist”. Sometimes I wonder what they are twisting? If we see continued strength in the housing market rates will certainly increase but there are a number of questions as too how lang the rebound party in real estate can continue with marginal growth in GDP and a lingering unemployment problem where there seems to be no easy answers.
Investors are still driving the market here in northern Palm Beach County and no doubt the rate of absorption needs to be watched as newly listed rental properties linger on the market longer than they did a few months back. Not in all segments but certainly in the lower priced investment grade developments we are seeing pressure.