iverson bw

From Greg Iverson

(636) 751-1068 – greg.iverson@upperendproperties.com

Mortgage rates took a sharp dip last week hitting a three month low according to a market survey.  The cause is most likely the devastation going on in Japan: the world’s third largest economy.

Investors appeared to shed equities due to fear of the catastrophe.  When this happens, investors typically will flood into the safety of US Treasuries and other similar bonds including mortgage bonds.  This increased demand causes lower yields for these bonds thereby lowering interest rates as well.

Freddie Mac’s weekly survey indicated that the average 30 year fixed rate mortgage came in at 4.76% for the week ending March 17, 2011.  The average 15 year came in at 3.97% for the same period.  ARMs also came in lower with the average 1 year ARM coming in as low as 3.17%.  This is the first time in about two months that we’ve seen the average 30 year come in below 5%.

Overall, most experts believe that this downward trend is a direct result of Middle East tensions and the potential for higher oil prices and, recently, the catastrophe in Japan.  If not for these circumstances, it appears rates would be higher at this point.  The general consensus is that rates will continue to rise as the United States economy continues to improve.

Last week we saw somewhat of a reversal, with rates beginning to climb again.  Weekly jobless claims continue showing improvement, but the long-term trend shows that rates will most likely continue to increase.

So – if you’re thinking of buying or refinancing a home, now may be the perfect time!

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