Today 6/18/09 Freddie Mac reported that the average mortgage interest rate for 30 year fixed-rate mortgages was 5.38% (5.37% in the southeast), down from 5.59% a week ago. The average interest rate for 15 year fixed-rate mortgages was 4.89%, down from 5.06% last week. A year ago the 30 year rate was 6.42%. So rates, while a bit higher than a month ago, are still pretty low.
It was explained by spokespersons that since inflation seems to be at a minimum, interest rates fell. Nothing gets the Fed more excited than a fear of inflation. When it is not on the horizon, they do little to raise rates. The consumer price index (inflation) rose by just 0.1% in May. Over the past year the overall drop in consumer prices was 1.3%, the largest since the year 1950. Kind of makes sense. When consumers aren't buying clothes, trips, cars, houses, pets, televisions, etc. it is only natural that retailers, wholesalers, and factories will lower prices to get buyers to spend money. Thus drops in prices and their corresponding indices.
As far as housing goes, they feel it is too early to say if things have bottomed out. But we do see inventory continuing to drop here in Zephyrhills and Dade City, Florida. Applications for mortgages fell for the first time in 4 weeks. Well, duh! When interest rates jump about 1% in just a few weeks time, it is only natural that homeowners and home buyers are more reticent about financing or refinancing. My guess it that if rates drop back below 5% we will see renewed interest and the number of mortgage applications will go back up.
As I reported just recently here, new construction of single-family homes went up for the third month in a row. In May it rose 7.5%. This could show builder confidence, which is a good thing. But, I am not sure we need that many new homein the marketplace at this point in time.
Do keep in mind that we are a very large country. So figures that come out for the entire nation, may have little or no relevance for your particular area. In the end, it is best if you speak with a local REALTOR or financing expert to see what the situation is for your part of the United States. Florida is not Michigan, nor is Maine the same as California. Market conditions can be very different from place-to-place.
If you want to learn more about Freddie Mac or see the details of their survey, go to: www.freddiemac.com and click on the link for "Current Weekly Survey". They break down the survey by specific regions in the United States so you can see how your state compares to other parts of the country. They also explain the mission of Freddie Mac and offer a lot of useful information for consumers.
If you would like to speak with a lender you can find some at my website: www.jelwell.century21bnr.com . You can also speak with your own bank, credit union, or mortgage broker to see what your particular interest rate would be, should you decide to finance a home purchase.
John Elwell - REALTOR
Bill Nye Realty, Inc.
Licensed in Florida