Penn. mortgage rates remain volatile, despite good employment news. Here's why

Posted by  on Sep 20, 2010

Pennsylvania Gov. Ed Rendell staged a press event in Philadelphia recently to tout the highest monthly gain in new jobs in nearly 15 years. Unemployment in Pennsylvania has been trending below the national average. The relative lack of a real estate bubble in the state has kept home values relatively stable. Mortgage delinquencies and foreclosure rates in the state remain lower than regional and national figures.

And yet, if you live in the Keystone State, you may have noticed that mortgage rates here remain among the most volatile in the country. One week, Pennsylvania mortgage rates might dip just below national averages. The next, a mortgage quote for property in Pittsburgh or Philly could come in as much as a full percentage point more than a similar deal in Baltimore or New York. Economists think this enhanced volatility stems from the same economic and social pressures behind the broader economic collapse of 2008.

Three reasons for wild mood swings in Penn. mortgage rates

  • Emotional carnival ride: Economists interviewed by regional media outlets noted that mortgage rates tend to be driven by the same emotional connections to property as stock prices. For instance, the "flash crash" of 2010 that threw investors on a financial Tilt-A-Whirl resulted from a series of gut reactions to everything from Greek bailout worries to a typo on a report about P&G's earnings.
  • Bank competition: Penn. mortgage rates tend to be driven by stronger competition among regional lenders. European lenders recently purchased large stakes in some of Pennsylvania's most prominent banks. Meanwhile, community banks and credit unions have endured consolidation and buyouts, including some high profile mergers with companies from New York and North Carolina. Lenders trying to make new community connections may get some headlines with low mortgage rates that can throw off regional averages.
  • Diverse Communities: Finally, mortgage rates in Pennsylvania echo the economic progress in highly diverse communities throughout the state. Recent state elections amplified the traditional tension between the affluent, urban, eastern portions of the state and its rural and industrial central and western regions. City tax incentives for condo sales in Philadelphia offset higher mortgage rates, while stable neighborhoods in the suburbs reward lenders prone to less risk.

While most Pennsylvania residents aren't at risk of losing their homes at the same rate as homeowners in other parts of the country, finding a good mortgage rate quote here may be a little more challenging. It pays to compare mortgage rates online from a variety of lenders before locking in the deal that feels right.


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