Interest rates continue to slide
Nobody can say being involved in southern Florida real estate isn’t fun. We have had an amazing year to date with strong sales and shrinking inventories much of the demand fueled by interest rates that seem to defy logic. While weakness in the overall economy drives rates further down one has to wonder just how low they can go and what impact this will have the future of the real estate market.
As of Sunday, the average overnight rate for a fixed 30-year mortgage as reported by Bankrate.com was at 3.55% down another 7 basis points from where we stood the previous week and another all time record low. The benchmark 15 year fixed rate was at 2.96% also down 7 basis points from the previous weeks level while the benchmark 5/1 adjustable rate mortgage again without much logic jumped and amazing 21 basis points to 2.99% from 2.78%. Why the 5/1 ARM would buck the trend in such a huge fashion also defies logic.
Not that there is logic to any of it but those who can qualify for loans as underwriting criteria gets tougher and are able to park themselves in a home for a long time with a fixed rate at these levels should be happy campers. We have been saying this for a long, long time and I see people who have re-financed their loans 3 times over the past couple years. Nowadays “old” record rates of 4.5% we first saw about a year ago seem to be off the chart high. In fact, this update we lengthened the time span of the chart above back a little over two years ago when we first breached the 5% level.
So where do we go from here? Anybody watching the bond market and especially in countries like Switzerland where talk of “negative” bod yields are getting louder and one wonders is this a scenario that may play itself out in the good old United States. We live in interesting times and I wouldn’t bet against anything these days. Keep your eyes and ears open as rates in fact could be going lower.
Local real estate sales seemed to have hit the brakes over the past two weeks and we will dig in to those metrics in our upcoming articles…………