With so much uncertainty in the world as it relates to the future of the economy, one thing is quite certain—mortgage rates have never been better! For most of the last six months mortgage rates have risen and fallen based on primarily two factors: the debt crisis in Europe and the relative strength of the US economy. This week has been no different. These two themes have been the foundation for analyst commentary and market action. However, the markets have barely moved—why? My theory is that three factors are playing in to our recent run of no-descript days of trading in the markets: acceptance that the European crisis will take a long time to resolve, acceptance that the US economy is slowing improving, and an end of year, holiday decision to simply not sweat the stuff we can’t control. For current mortgage rates the result is an extended period spent at historic lows.
One economic report in the US today supports the notion that we should simply wait until next year to expect any real changes in the markets—or mortgage rates for that matter. The Consumer Price Index, the key measure of inflation for you and me when we go shopping, eat out or fill up our cars with gas came in at a rate of change of….0.0%. My afternoon Twitter rate update yesterday began with zzzzz…zzzz, to signify the sleep inducing level of activity in the markets. Well if we were nodding-off yesterday afternoon, then we should be in full-blown REM sleep today.
In Europe today I suppose you could say there was a little more activity. One chamber of the Italian parliament passed a measure supporting proposed austerity measures that will be necessary to win financial support from the International Monetary Fund and the European Financial Stability Fund (EFSF). Speaking of the EFSF, the managers of this bailout fund created earlier this year have decided to remove a sentence from the prospectus they created to solicit private investments that suggested that one risk of investing in the fund was the possibility that the euro currency could cease to exist at some point as a “lawful currency”. Ha! I suspect anyone considering investing in this euro-denominated fund understands that risk is real whether it is explicitly stated in the prospectus or not!
It’s a great day to lock a mortgage interest rate for a purchase or refinance…and to focus on enjoying the holiday season!
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KyleM
December 17, 2011 @ 3:30 pm
Rates are indeed good but just try to get a qualifying apprasial. Apprasials are coming in very low for some reason and not allowing those that would normally qualify for a refinance or purchase of existing homes to not get the loan. I personally had a apprasial just done on my home. The appraiser compared my property to others for sale and recent sellings similar in the area. (I’m think one was a short sale). Even though I had added 1200 square feet of living space and remodeled the entire kitchen (within the last year)to my home my value per square foot was about 2/3 that of the other houses that it was compared to. Comparing the appraisal to Zillow it my home was appraised at about 2/3 of Zillow’s value. I’m not sure what’s driving the low appraisals but it’s the reason that more people are not taking advantage of the low interest rates.
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