Lowest Mortgage Rates of the Year
When Freddie Mac unveiled the average mortgage rates for week ending May 13, they must have surprised many commentators. Because, contrary to predictions from just a month or two ago, the 30-year, fixed-rate mortgage (FRM) rate was down for the fifth week in a row, averaging just 4.93 percent.
That means, as the Boston Globe confirms, that Americans currently have access to the lowest mortgage rates so far this year, and ones that are extremely close to the 4.71 percent record low, which was set in 2009.
The Story Behind Today's Mortgage Rates
Why have so many so-called experts been proved wrong about current trends in mortgage rates? The answer could be the same as that given by a British prime minister, Harold Macmillan, when he was asked by a journalist what was most likely to blow his government off course. The premier replied: "Events, dear boy. Events."
And that's the problem frequently faced by by practitioners of what is laughingly called the "science" of economics. All those incredibly sophisticated computer models are very easily blown off course by events.
Yes, but What Events?
Oddly enough, today's mortgage rates have benefited from events far, far away in Greece, and elsewhere in Europe. Per person, Greek debt makes that owed by America look like small change. And, as the Guardian describes, that has triggered a crisis of confidence, both in the solvency of the country itself, and in the ability of its currency, the euro, to accommodate the emergency. Pessimists warn of the possibility of debt contagion among other euro-zone nations, including Portugal, Spain, and maybe even Italy and Ireland.
All of which poses a dilemma for investors. They have to invest their money somewhere (they wouldn't be investors if they stashed it under the mattress), but at times like this they lose their appetite for risk, and instead prefer to find safe--though less profitable--havens. Michael Fratantoni, who is the Mortgage Bankers Association's (MBA's) vice president of research and economics, summed it up rather well in a statement:
The recent plunge in rates on US Treasury securities, due to a flight to quality as investors worldwide sought shelter from the Greek debt crisis, benefited US mortgage borrowers last week.
Take Advantage of Current Mortgage Rates
If you're thinking of buying a home or refinancing, then the unexpectedly low level of current mortgage rates is providing you with a new opportunity to find a bargain. Discover competitive quotes from some of the best mortgage lenders in the country here.