The 30-year fixed-rate mortgage dropped below 6% on average this holiday-shortened week, a seven-week low, according to Freddie Mac's weekly survey, released on Wednesday and reported on MarketWatch.com. The mortgage averaged 5.97% for the week ending Nov. 26, down from last week's 6.04% average. The 30-year mortgage averaged 6.10% a year ago; it hasn't been lower since Oct. 9, when it averaged 5.94%. On Tuesday, the Federal Reserve said that it will launch a new program to buy up to $600 billion in mortgage-backed securities and GSE (government sponsored enterprises, i.e. Fannie/Freddie) direct obligations to help the mortgage market. Under the new plan, the Fed will purchase up to $100 billion in direct obligations of housing-related debt from Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Additionally, up to another $500 billion in mortgage-backed securities backed by Fannie, Freddie, and Ginnie Mae will be purchased, with purchases conducted by assets managers selected by the Fed. According to the Federal Reserve statement, "This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally." None of the actual purchases pursuant to this program could have taken place this week – they hope to start by the end of the year and really kick-in early next year. But, perhaps the mere thought of intervention on this scale is responsible for pushing down the rates. Or, perhaps it was the other news floating out over the airways that the big fear among economists now is not inflation – which drives up interest rates – but deflation. For whatever reason, home loan rates are down and that makes it a better time to buy than it was the week before. The trick about home loan rates going down is that eventually, the advantages in rates start to push up home prices. That probably won’t happen for a while, because the inventory of homes is still high. But keep an eye on those housing inventory numbers. If they start to fall while interest rates are low, don’t blink or you will miss the bottom of the home market. To buy a Flagstaff home, contact Team Heitland at RE/MAX Peak Properties. Team Leader is Ann Heitland, Associate Broker. 928-714-0001. |
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