Surprise, surprise. Now that Europe seems to be falling apart, economically at least, it appears as if its misfortune may be our fortune–at least when it comes to our real estate market. Mortgage rates have been falling, and some think it is due to the financial instability overseas.
In case you haven’t noticed, rates are now near 50-year lows, reports the Wall Street Journal. Right now, the going rate for a 30 year-fixed is about 4.86% and some believe it will fall to maybe 4.5% by the summer months.
Many had expected rates to actually climb to maybe 6% after several government programs, including that first time buyers’ tax credit, came to an end.
But then, along came the mess in Europe, sparked by the Greeks.
Seems worried Europeans are pumping cash into the U.S. which is viewed as a safer bet than their various homelands.
Says the WSJ, “This buying pushed down yields on Treasury bonds. Because mortgage rates are closely pegged to yields on 10-year Treasury notes…the decline in Treasurys pulled down mortgage yields.”
Of course, lower rates, while good, don’t automatically mean a burst of growth in the housing market. People still need to have well paying jobs–actually, they need to have jobs, period–to take advantage of the lower mortgage rates. In many parts of the country, this is still a giant problem.
That said, lower mortgage rates are still good news no matter how one looks at it.