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Mortgage Rates Drop but Remain Volatile

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

 

"Although the Fed says it will no longer use "patience" when it comes to raising short-term interest rates, it would appear that they will instead be exercising a kind of lengthy discretion when lifting interest rates. Confused? It's little wonder.

The close of the Fed meeting did show that the likelihood of interest rate increases at some point this year is now virtually 100%, even if the timing of the first move remains unclear. However, the latest set of "dot plots" denoting the outlooks of FOMC members of how high the Federal Funds rate would rise this year says that the most likely course going forward is one of smaller increases over a longer period of time. FOMC members collectively now expect a lower level of the Fed Funds at the end of the year than they did just three months ago. The "dot plots" revealed that a majority 10 of 17 FOMC members see the Fed Funds at 0.625 percent or 0.875 percent at the close of 2015; four entries were above and three were below this range.

 

Sensing that the period of rock-bottom interest rates is likely to persist for a while longer yet, stock markets rallied and bond yields dropped, pulling mortgage rates down with them. 

 

 

We are likely to be in for a curious and volatile time as we move forward. With April seemingly off the table, we should probably have a "valley" of sorts for interest rates, or a kind of plateau at least, which may run for the next few weeks. Once we pass into May, the June Fed meeting begins to loom larger in the windshield, markets may start to exhibit more nervous behavior, and mortgage rates may rise.

 

Between now and then we have several employment reports; if continued strong, and especially if there is any uptick in wage growth, rates will start to tend to the firmer. Should the downtrend in inflation level off or begin to reverse, rates would also tend to lift somewhat. Also, there are some hints of improving growth in the eurozone, and should this persist or accelerate it would also contribute to a bit of firmness for rates as money moves out of the safe haven of the U.S. in hopes of better returns.

 

A data-driven Fed and an unclear pattern for global growth are likely to leave us with more volatile markets overall. We don't think our present forecast ranges are in peril at the moment, but we could continue to experience mortgage pogo-sticking as we move forward. The ten-year Treasury yield, an important interest rate for mortgage pricing, fell by two-tenths of a percentage point from last Friday to this Wednesday, bounced up a bit and then fell back again. As such, we are likely looking at another easing in rates next week, at least early on, but there is a fair bit of data out, too, which may help to give us some pogoing for rates. Overall, call it a 3-4 basis point decline from here by the time we close business next Friday."

The following are interest rate quotes from American California Financial:

 

30 Yr Fixed FHA

Rate

APR

 

       

3.250

4.379

Details

       

 

Conforming 30 Yr Fixed up to $417000

Rate

APR

 

       

3.750

3.869

Details

       

 

Conforming Jumbo 30 Yr Fixed $417001 - $625500

Rate

APR

 

       

3.875

3.983

Details

       

 

Jumbo 30 Yr. to $1.5 Mil

Rate

APR

 

       

4.000

4.094

Details

       

 

 

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

Rate

APR

 

       

3.375

3.365

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.

Comment balloon 0 commentsMaureen Megowan • March 20 2015 07:01PM

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