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September 19, 2012

September 19: San Luis Obispo Mortgage rate update… low, but could be better

by Rylan Stewart

Last week, Jason Grote wrote an article hypothesizing that the Fed’s QE3 action would bring interest rates lower, amidst other side-effects to help stabilize the real estate and mortgage market.

Grote based his research on historical precedent and common sense. With the injection of dollars into the economy, interest rates were greased for a fall. Past trends would suggest a similar drop – given 10-year Treasury yield prices and the ratio between mortgage rates and mortgage bond yields.

What we have seen thus far has been sparing, modest drops in mortgage rates. This lack of movement is breaking all kinds of expectations, and prompting prominent news organizations to speculate why this might be. For example, the New York Times estimates that given the historical spread between mortgage rate to mortgage bond yields, the 30-year fixed could be as low as 2.800 percent right now.

Yesterday, the Wall Street Journal touched on the question, stating, “Many economists are skeptical the drop in mortgage-bond yields will be fully passed on to consumer through lower mortgage rates.”

Today, the New York Times followed up with why consumers won’t be the ones benefitting from lower rates. The short answer: while (historically) current conditions would push rates lower, banks are under no obligation to do so, and with rates already at extremely favorable levels, banks are already busy enough. Instead of lowering rates, banks are often opting to keep them higher and benefit financially. Here is the full article.

 

30 year fixed –

September 18:

3.250 percent (3.281 percent APR)

Today:

3.250 percent (3.271 APR)

- 0.010 percent APR

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15 year fixed –

September 18:

2.750 percent (2.734 percent APR)

Today:

2.750 percent (2.734 percent APR)

No Change

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30 year High Balance -

September 18:

3.375 percent (3.400 percent APR)

Today:

3.375  percent (3.400 percent APR)

No Change

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30 Year FHA -

September 18:

3.250 percent (4.097 percent APR)

Today:

3.250  percent (4.097 percent APR)

No Change

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30 Year VA

September 18:

3.250 percent (3.251 percent APR)

Today:

3.250  percent (3.251 percent APR)

No Change


APR is subject to increase and terms subject to change. APRs may very depending on loan details such as points, loan amount and loan-to-value, your credit, property type and occupancy. Closed rate and APR assume a rate and term refinance of a single family detached owner-occupied primary residence, loan amount $417,000 ($561,200 for high balance), and a minimum FICO score of 760. Situations vary based on applicant.

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Central Coast Lending is a California mortgage brokerage based in San Luis Obispo County. With offices in San Luis Obispo, Morro Bay, Paso Robles, and Arroyo Grande, Central Coast Lending is the top source for Central Coast mortgage, real estate, and home loan needs. To see why using a broker offers lower rates and superior service, click HERE. For a free, hassle-free online pre-qualification click HERE or call 805.543.LOAN to talk to one of our expert loan officers.

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