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Interest Rates move up slightly

Interest rates for buying a home on the Palos Verdes Peninsula moved up slightly this week.The following are excerpts from the newsletter on interest rates published by HSH Associates :

 

"Rebounding stock markets and comforting economic data have reassured investors that things are pretty good at the moment, and mortgage rates continued on a gentle firming path after a tumultuous stretch in mid-month.

In a direct acknowledgment that the economy is on solid footing (and despite a rocky month of October for financial markets) the Fed followed its predetermined path to end the accumulation of Mortgage-Backed Securities and Treasury bonds. Quantitative Easing (QE) hasn't fully ended, though, as the Fed will continue to "recycle" (reinvest) inbound funds from maturing Treasury bonds and principal payments on mortgages into like-sized purchases of new bonds. As such, it will keep its portfolio of holdings level and continue to help foster a low long-term interest rate environment for at least a while longer yet.

The actual end of QE will begin when the Fed starts to raise short-term interest rates at some point and stops recycling cash; present indications are that this process of normalization will begin in the second or third quarters of 2015, so we will likely have a "considerable period" (the Fed's language) of 6 to 9 months before that occurs.

In the meantime, mortgage and underlying interest rates cannot regularly ignore good economic news, and have been steadily firming in the days after a mid-month panic fit by the stock and bond markets. There's no spike in rates to be expected, but we are seeing a bit of a gradual uptick at the moment.

 

 

 

 

 

 

Employment and inflation reports will become increasingly important in determining exactly how long any "considerable period" will last. At present, 6 to 9 months is the forecast, but if unemployment continues to decline and/or PCE inflation (the Fed's preferred measure, currently 1.2 percent and easing) shows regular traction, that "considerable period" may not last that long. We should have a least a few months before any market nervousness about the Fed's timing becomes evident, though.

 

Of course, that's still a ways out in the future. At the moment, and for our purposes here, we only need to look a week ahead. The present slow uptrend for rates should continue next week, where we expect to add another 3-5 basis points to interest rates.

The following are interest rate quotes from American California Financial:

 

30 Yr Fixed FHA

Rate

APR

 

       

3.250

4.892

Details

       

 

Conforming 30 Yr Fixed up to $417000

Rate

APR

 

       

4.000

4.120

Details

       

 

Conforming Jumbo 30 Yr Fixed $417001 - $625500

Rate

APR

 

       

4.125

4.235

Details

       

 

Jumbo 30 Yr. to $1.5 Mil

Rate

APR

 

       

4.125

4.219

Details

       

 

Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)

Rate

APR

 

       

3.250

3.093

Details

       

For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

2 commentsMaureen Megowan • October 31 2014 06:22PM
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