Mortgage Rates Hit All-Time Record Low

The Federal Home Loan Mortgage Corporation has provided potential home buyers with another compelling reason to get off the fence and buy a home, as they reported last week that mortgage rates have hit an all-time historic low rate.

The average mortgage interest rate for 30-year fixed-rate mortgages dropped to an all-time record low of 4.71% this week, pushed lower by an aggressive government campaign to reduce borrowing costs.

The rate, published last Thursday by the Federal Home Loan Mortgage Corporation, known as Freddie Mac, is the lowest since the mortgage finance company began tracking the data in 1971. The previous record of 4.78 percent was set in April and matched last week.

Rates on five-year, adjustable-rate mortgages averaged 4.19 percent, up from 4.18% a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.25% from 4.35%.

The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to bring down mortgage rates, but that money is set to run out this spring. The goal of the program is to make home buying more affordable and prop up the housing market.

Buyers and homeowners who want to refinance are picking up their phones. Mortgage applications rose 2% last week from a week earlier, the Mortgage Bankers Association said Wednesday, driven by a more than 4% increase in purchase applications and a nearly 2% increase in applications to refinance existing loans.

Home buyers and potential home buyers must understand that they have a finite window to seize on the opportunities which are available in the marketplace today.  It is the very best opportunity most people will ever see in their lifetimes, both in mortgage rates and in new home pricing.  Both of these, however, are a diminishing resource.

As I mentioned above, mortgage rates are being forced to a artificially low levels as the US government forces $1.25 trillion into the mortgage markets.  When this unprecedented market intervention ends in the spring, interest rates will shoot up from their present historic lows.  Home buyers should expect to pay rates which are at least a full percentage point – or more – higher when that occurs.  Additionally, housing price bargains available today are quickly disappearing.

In Plano Texas, along with most other areas of the Dallas Metroplex, the inventory of homes on the market is plummeting.  Please visit the Daily Market Statistics charts which are published on our Dallas Urban Blog, as they illustrate, quite graphically, how the marketplace is changing.  Also, our readers are invited to visit our Dallas Housing Market Report which has been prepared by Residential Strategies.  Readers may also download the Dallas Housing Market Report as a PDF file.  Dallas based market research firm Residential Strategies consistently provides excellent, well informed housing market information.

Business Week published an article last week entitled “if You Don’t Buy a House Now, You’re Either Broke or Stupid.  While this is unpleasant phraseology, it is absolutely true.  If you’re in the market for a new home, don’t wait; you’ll regret it.  This self-serving yet altruistic message is brought to you by:

Scott Schaefer and Lexington Luxury Builders

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