Lending Landscape - January 24, 2008

Mortgage rates have been on a roller coaster this week. Ultimately they ended up lower and economic policies revealed this week should continue to push them further down. On Tuesday the Federal Reserve Board cut short term interest rates in an emergency meeting by .75%. Concerns on the stock market sent mortgage rates plunging, though a recovery later in the week sent rates, roller coaster like, lower. In addition, short term rates have finally become lower than fixed rates.

Mortgage rates continued to fall this week, with 30-year and 15-year fixed-rate mortgages hitting their lowest levels in nearly four years, Freddie Mac reported Thursday.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 5.48 percent for the week ending Thursday, down from 5.69 percent last week.

At this time last year, the 30-year fixed-rate mortgage averaged 6.25 percent. The 30-year rate has not been lower since the week ending March 25, 2004, when it averaged 5.40 percent.

One-year Treasury-indexed ARMs averaged 4.99 percent, down from 5.26 percent last week. At this time a year ago, the 1-year ARM averaged 5.49 percent.

It's been a volatile week, indeed a volatile month with concerns in housing spilling over to other parts of the economy. Decisions made this week by the Fed in regards to interest rates and by the Federal government in regards to loan limits and FHA loan qualifications should stabilize the housing and lending markets.

The Salt Lake Tribune reported today -

Utah should be able to rely on steady job growth, which has slowed from 4.5 percent to 3.5 percent but is expected to remain among the most robust in the nation. "It's much better than any other state, and we're a long way from a negative situation," Matthews said.

Developments since this article was published should further stabilize the real estate market. Ultimately, lower rates and lower prices in the face of a slowing market present excellent opportunities to buy new housing in Utah now. Let's not forget that interest rates fluctuate on an hourly basis and remarkable opportunities present themselves to those that are prepared. In the past two days mortgage rates have adjusted up several times per day. Those who are prepared to act can benefit.

Recent activity by the Fed and Congress will significantly benefit new home buyers in Utah.