How record low interest rates affect SF and Marin

Cheap mortgages have helped drive a modest recovery in the weak housing market this year.

Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan dropped to 3.66% from 3.71% last week. It's the lowest rate since long-term mortgages began in the 1950s.

The average rate on the 15-year mortgage, a popular refinancing option, declined to 2.95%. That's down from 2.98% last week and just above the record 2.94% of two weeks ago.

The rate on the 30-year loan has been below 4 % since December.

National Mortgage Rates

National overnight averages Today +/- 30 yr fixed mtg 3.62% 15 yr fixed mtg 2.97% 5/1 ARM 2.68% $30K home equity loan 5.73% $30K HELOC 4.61% About these rates

In San Francisco the rental market is just nuts!  Some lucky buyers have benefitted from recent IPOs and there is plenty of money chasing a very limited housing market in San Francisco and Marin.  We are starting to see some serious bidding wars on good homes for sale.  If you've been considering selling you should give me a call.  If you plan to stay let's check and see that you have the best mortgage and that you can accomplish all your housing goals.

Low rates could provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less on their loans and have more money to spend.

Still, the pace of home sales remains well below healthy levels. Sales of previously occupied homes dipped in May to a seasonally adjusted annual rate of 4.55 million, although they are up from the same month last year.  We have "low inventory" and limited choices of homes for sale.

Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks. Some would-be home buyers are holding off because they fear that home prices could keep falling.  That's not likely.

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasury securities and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.

For advice and real estate services you can trust call Spencer at 415-690-0194

North Bay Realty & Loans