2879
Market Turmoil in US
World Economy

Market Turmoil in US

A sudden plunge in mortgage rates this week raised an urgent question for millions of Americans: Should I refinance my mortgage?
Across the country, homeowners and would-be homeowners eager for a bargain rate fired off inquiries to lenders, AP reported.
The opportunity emerged from the tumult that seized financial markets and sent stock prices and bond yields tumbling. Rates on long-term mortgages tend to track the 10-year Treasury yield, which fell below 2 percent for the first time since May 2013.
Accordingly, the average rate for a 30-year fixed mortgage, mortgage giant Freddie Mac reported, dipped below 4 percent to 3.97 percent — a tantalizing figure. As recently as January, the average was 4.53 percent.
Ultra-low rates do carry risks as well as opportunities. Charges and fees can shortchange refinancers who are focused only on the potential savings. And falling rates are often associated with the broader risk of an economic slowdown that could eventually reduce the income that some people have to pay their mortgages.
Yet the tempting possibility of locking in a sub-4 percent rate has a way of motivating people.
“It gets people excited,” said Michelle Meyer, an economist at Bank of America. “It gets mortgage bankers excited. It gets prospective buyers excited.”

 Loan Rates
Before this week, many bankers, lenders and borrowers had assumed that home loan rates would soon start rising closer to a two-decade average of 6 percent. That was based on expectations that the Federal Reserve would start raising its key short-term rate next year — a move that would likely lead to higher mortgage rates, too.
But that assumption fell suddenly into doubt as stocks plunged Monday and Wednesday amid fears about global economic weaknesses, the spread of Ebola and the threat of the Islamic State militia group in the Middle East.
Seeking safety, investors poured money into US Treasury. Higher demand drives up prices for those government bonds and causes their yields to drop.
The yield on the 10-year note traded as low as 1.91 percent Wednesday before ending the day at 2.14 percent. A stock market rally on Friday helped lift the yield to 2.20 percent. That suggested that the moment to refinance might be fleeting.
Even a slight drop in mortgage rates can translate into significant savings over the long run. For a median-priced home worth $221,000, a 0.5 percentage point decline in a mortgage rate would produce savings of $50 a month, according to a Bank of America analysis.

 

Short URL : http://goo.gl/ZXiXJ2

You can also read ...

Business confidence fell to its lowest level since August 2013 and around 7% of companies expected a contraction.
According to data from the International Monetary Fund in...
China Warned of Ballooning SOEs
Former chief of the World Bank Robert Zoellick cautioned China...
Shrinking unemployment in the US, Japan and the eurozone finally forces companies  to lift wages to retain and attract staff.
Workers in the world's richest countries are getting their...
New Zealand Q2 GDP Growth Picking Up
New Zealand’s economic growth is expected to have accelerated...
Saudi Sovereign Fund Secures $11 Billion Loan
Saudi Arabia's sovereign wealth fund said Monday it had...
Lira Eases Against Dollar
Turkey’s lira weakened against the dollar on Monday as...
By 2025 more than half of all current workplace tasks  will be performed by machines.
Robots will handle 52% of current work tasks by 2025, almost...
Myanmar Businesses Want Lower Taxes
Myanmar businesses are urging the government to lower the...

Trending

Googleplus