30 YEAR FIXED RATES DROP TO 4% / WILD WEEK ON WALL STREET

30 YEAR FIXED RATES DROP TO 4%

Last week was one of the craziest weeks in the financial markets since 2008. The stock market and interest rate market fluctuated greatly every day, sometimes changing mortgage pricing by thousands of dollars in a few minutes. Things can change fast due to the extreme volatility in the market. The good news is that mortgage rates went down to their lowest levels ever.

Technical indicators show that the bond market is overbought right now – which means interest rates are really lower than they should be. I expect a correction in the near future pushing rates/pricing back up a little bit – maybe to 4.25% on a 30 year fixed product. My advice would be to lock in pricing if you are floating a loan or considering starting a new loan.

Below are current rates and pricing for a well qualified borrower.

30 year fixed: 4% paying 1 pt, 4.25% paying 0 pts

20 year fixed: 3.875% paying .8 pts , 4.125% paying 0 pts

15 year fixed: 3.375% paying 1 pt, 3.75% paying 0 pts

5/1 ARM: 2.875% paying .61 pts, 3.125% paying 0 pts

7/1 ARM: for 3.125% paying .83 pts, 3.5% paying 0 pts

30 year fixed FHA: 3.875% paying .9 pts, 4.25% paying 0 pts

15 year fixed FHA: 3.25% paying .45pts, 3.5% paying 0 pts

30 year fixed VA: 3.875% paying .75 pts, 4.125% paying 0 pts

30 year fixed High Balance Loan: 4.375% paying 0 pts

THE WILD WEEK ON WALL STREET

Below is how the DOW ended each day last week:

Monday: -634.76

Tuesday: +429.62

Wednesday: -519.83

Thursday: +116.63

Friday: +125.71

In a normal market, a large swing is 100 pts one way or the other. This is a market that over reacts to most financial news. Panic can set in very easily. If you look at the stock market – it has ended lower 4 of the past 5 weeks. When stock markets are down, interest rates usually get better.

Typically a stock market can only go one way for so long before you get some sort of correction back the other way. I expect that to happen again here. That is why I recommend taking advantage of the recent rate dip if you are on the market for a home loan. Even though the FED on Tuesday maintained their commitment to keep rates low for at least the next 2 years, they have already used most of their tools to keep rates low. I do expect mortgage interest rates to remain low, but I do not expect 30 year fixed rates to remain as low as 4%.

30 year fixed rates drop to 4% , wild week on Wall Street

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