While the housing conditions improve, mortgage interest rates remain near record-low levels. At the end of June 14th, a 30-year fixed-rate mortgage averaged at 3.71%!
What is going on?
If you apply the supply-and-demand logic to the housing market where if there is more demand of the housing market, shouldn't the cost to borrow be on the rise as well?
Not really. In fact mortgage rates are influenced by a number of factors that include policy decisions from the U.S. Federal Reserve and the overall economic picture of the U.S. and abroad.
As part of The Fed's Operation Twist program, interests rates remain low to the end of this month. The program involves buying long-term securities and selling short-term debt. The Federal Open Market committee is thinking about the possibility of extending the program or taking other steps to keep long-term interest rates low.
Another factor is the uncertainty in Europe that includes the worry about whether the euro zone will remain integrated and new concerns about Spain's economy.
While improvements in the U.S. economy can influence mortgage rates, "there hasn't been enough good news domestically to drive mortgage rates higher" Amy Hoak, MarketWatch.com
A recent report form Harvard University's Joint Center for Housing Studies suggest that housing recovery is still in its early stages and faces obstacles including foreclosure inventory that has yet to hit the market and drop in the median household incomes.
So what does this mean for Buyers?
Low Mortgage rates aren't expected to go away anytime soon.
No comments:
Post a Comment