Mortgage markets improved last week on slowing economic growth worldwide and investor thirst for "safe" investments. China's economy posted to its weakest growth since 2009 and economic activity in the Eurozone continued to sag. Both events resulted in a broad-based sell-off of equities and non-U.S. bonds. Mortgage bonds benefited from last week's flight-to-quality as bond pricing moved higher. When mortgage bond prices rise, mortgage rates fall. According to Freddie Mac, the average 30-year fixed rate mortgage rate is now
down to 3.56% nationwide for borrowers willing to pay 0.7 discount points plus a full set of closing costs. The 15-year fixed rate mortgage fell to 2.86%, on average. Both mortgage rates are all-time records, rewarding today's Henrico home buyers and mortgage rate shoppers. The principal + interest mortgage payment on a $200,000 mortgage is now just $904.80 per month. Low rates may not last forever. One reason why low rates may not last is that, also last week, the Federal Reserve released the minutes from its June 2012 meeting. In it, the Fed appeared more ready to add new market stimulus than Wall Street had expected. The market's initial reaction was to push mortgage rates higher because new stimulus would encourage risk-taking among traders, and invite inflation. This week will see the release of a number of key data points for the U.S. economy :
If any of these reports show better-than-expected results, mortgage rates are expected to rise. In addition, Federal Reserve Chairman Ben Bernanke begins a 2-day congressional testimony beginning Tuesday. The chairman's words can move mortgage markets. Mortgage rates remain at historical loans. If you have not yet locked a mortgage rate, talk to your loan officer soon.
