Interest Rates Plummet to New 62 Week Low

We once again close in on sub 4% money

It has been quite a while since we brought you an update on interest rates. Frankly, there just hadn’t been any news to bring you. On April 13th the average overnight rate on a conforming 30 year fixed loan sat at 4.26%. A week ago it sat at 4.28%. There were some moves here and there but nothing dramatic. Then over the past week that changed.

Interest Rates

As of today, rates on that same 30 year fixed conforming loan have dropped 22 basis points from last weeks’ numbers and sit at 4.06%. That is the lowest rate we have seen since way back on June 16th of 2013. The lowest rate in 62 weeks. We are within a whisker of those rates dropping below 4% that not too long ago seemed to be in the rear mirror view forever.

The Federal Reserve, who has amassed $4.4 trillion in balance sheet debt through their Quantitative Easing programs, has scaled back purchases. From 85 billion monthly to 45 billion. They still say the end of Quantitative Easing will soon be here. Designed to lower rates one would think that be ending the program rates would go up. They did jump about a point in a fairly short period between May and July of last year when the Fed announced they were “cutting back”.

In reality, since the Fed actually did start cutting at the beginning of this year rates are down. Significantly lower. In fact they are down a full 50 basis points, a full 1/2 point since January 1st. Down to new 62 week lows. Go figure. When Ben Bernanke announced back on June 19th of last year that the Fed was planning on “tapering” the stock market dropped 4.3% in a couple days. Nothing makes sense when it comes to the cost of borrowing money and we still believe rates are more “artificially controlled” than anyone would believe. We think that rates cannot go up too high or the United States could not meet the interest payments on our massive 17+ trillion, and growing, debt. We keep kicking the can down the road all the while the “fiscal cliff” seems a distant memory but in fact keeps getting bigger.

Trying to follow what might happen is a head spinning, mind numbing game, with no answer. Borrowers should rejoice. Refinancing will soon again be in vogue. Lower rates should help drive more real estate purchases at higher prices. All is good but be careful. Buy a home that you can afford. Lock in long term rates with 20% down conventional loans whenever possible. Times are good but be careful because the can is just being kicked down the road. Always interesting, always fun.

 

Fins up…..

 

 

Tom Priester
Principal Broker

Paradise Sharks Real Estate
561.308.0175
tom@paradisesharks.com

http://www.paradisesharks.com

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Tom Priester

After spending years among the top individual performers at one of Palm Beach County’s largest and most successful real estate brokerages, Tom Priester knew there was another way to do real estate. A better way. Real estate services focused on the customer. Like the old days when the customer truly was #1. He tired of listening to why he should be going out to have his customers sign one sided buyers’ brokerage agreements. He tired of hearing how he should be selling customers why paying higher commissions, like 7% and 8%, was to their benefit. He tired of hearing how he should sell his clients on why they should be paying hundreds of dollars in additional “transaction fees”. The business had slid way too far from being focused on the customer. His customer. So he decided the time was right to be different…..by design. To start his own unique boutique real estate firm truly focused on his customers. They will now have access to a process focused on them. Only the best marketing techniques to sell their homes. No cutting corners. Commission structures based on his clients needs not his. Paradise Sharks was born out of Tom’s passion to return this business to the customer. Where it belongs. If you want a real estate experience that benefits you, just give Tom a call at 561 308-0175 or send him an e-mail at tom@paradisesharks.com. You can always pay more and receive less but that just would not make any sense. Would it?

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