Mortgage rates continue to improve
Back in January I commented on the direction of standard residential mortgage rates and pointed out that 5% interest rates were the best we had seen in the last fifty years. Rates continued to decline in March, and despite a slight blip up in the past few days, mortgage rates remain incredibly low and offer a great opportunity to home buyers. Standard thirty year mortgages are now averaging 4.85%, with 15 year mortgages at 4.58 per cent.
Speaking this afternoon, Bernanke said that the Federal Reserve’s extraordinary facilities “are having the intended effect,” citing as an example declines in 30-year fixed mortgage rates in the United States following the central bank’s decision to purchase U.S. Treasuries. “[Thirty]-year fixed mortgage rates, which responded very little to our cuts in the target for the federal funds rate, have declined 1 percentage point to 1-1/2 percentage points since our first MBS purchase program was announced in November,” he said.
With home prices continuing to drop, I am now seeing a number of first time home buyers in the market. For many, the combination of low home prices and very cheap mortgages are proving irresistible, with all-in costs in many cases lower than their current rental rates. Combine the low interest rate with the tax credit of $8,000 available to first-time buyers and it’s not surprising that the number of homes purchased by first-time home buyers is on the rise.
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