Weekly Mortgage Update
|It’s the flight to safety effect coming into play again this week as the S&P index has dropped approximately 10% and fears continue over Greek and Portuguese debt. The flight to safety occurs when investors become less concerned with a rate of return and more concerned with just keeping what they have. The US bond market is the place to put your money if your goal is just to get it back. US Treasuries and Mortgage Backed Securities are both large parts of that market.
The flight to safety is why we saw rates continue to drop this week. Think of it this way, if you’re going to give me your money anyway, I don’t have to pay you as high of an interest rate to entice you. So, money flows in, I lower my rate, and money keeps flowing in…because I’m still the safest game in town. The Treasury capitalized on this very fact this week and sold BILLIONS of dollars worth of treasuries. Buyers are the beneficiaries! Rates have dropped a full 1/2 percent since February, allowing a buyer with a $200,000 loan to buy approximately $12,000 more home for the same monthly payment! Houses YOU love just became MUCH more affordable.
Oklahoma Bond Authority reduced their rate this week to 5.25% with 3.5% Down Payment Assistance, and new income limits were increased by $1,200 per year, so the income limit for a 1 – 2 member household went from $59,400 to $60,600 in a non targeted area.
This week Freddie Mac’s 30 yr. fixed rate survey dropped to 4.49%, depending on program, credit and points.
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