From Realtor Magazine Online, Daily Real Estate News March 20, 2008
The Federal Reserve’s rate cuts aren’t doing much to lower mortgage rate for new buyers, but they could help holders of existing adjustable rate mortgages.
Rates on home-equity lines of credit, credit cards and auto loans have all dropped. In addition, millions of homeowners won't face higher rates as their adjustable-rate mortgages reset.
Applicants for new mortgage are likely to continue to pay more. Mortgage rates typically follow the 10-year Treasury and have historically traded at about 1.8 percentage points above the 10-year Treasury yield. Those Treasurys currently yield about 3.451 percent. But investors, including pension funds, insurance companies and bond mutual funds, are demanding a greater premium these days for mortgages over less risky U.S. Treasurys.
The best advice for those seeking a mortgage: shop around. All mortgages aren’t priced alike, experts say.
Source: The Wall Street Journal, Jeff D. Opdyke and Jane J. Kim (03/19/2008)
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