Sue Fox, @Properties. Direct 773.816.1788
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Mortgage interest rates recently fell to 50-year lows, in spite of the fact that there aren’t too many buyers left to appreciate them. Most Chicago-area home buyers who took advantage of the government’s $8,000 or 6,500 tax credit have already closed (or will in June), but for those folks still out house-hunting: It’s time to lock in your interest rate!
Average 30-year mortgage rates dropped to 4.8% last week, according to the Mortgage Bankers Association. This is stunningly cheap money, but unfortunately home-buying applications also plunged to their lowest level in more than a decade. That’s because “anybody that wanted to buy a house probably did last month,” Jay Brinkmann, the MBA’s chief economist, told the Wall Street Journal.
The low interest rates come as something of a surprise, because all year economists have been predicting rates would rise after the Federal Reserve halted its $1.25 trillion in purchases of mortgage securities in March. Instead, Europe began to unravel.
The debt crisis gripping Greece, Spain, Portugal and other over-extended European countries has prompted a wave of international investors to seek safe harbor … in the United States. Investors have poured a flood of money into safe-haven assets such as mortgage-backed securities guaranteed by the government and U.S. Treasury bonds, which are closely tied to mortgage rates.
So instead of mortgage rates rising to 6%, as many economists had forecast, they now look like they could settle as low as 4.5% this summer.
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