We’re a little over two weeks into 2020 and mortgage rates are having a great start to the year. In fact mortgage rates low in California because the bond market has been stable and the risks we were facing in late 2018 are behind us. What two risks am I talking about?
- The trade war with China
- Brexit
The President has signed the Phase One Trade deal with China and the markets barely budged. Heading into December there was a lot of concern among mortgage professionals that mortgage rate would push much higher once a deal was reached.
While Brexit is a long way from being resolved it appears the market no longer views this as a risk. Mortgage rates are low in California because the bond market has moved on and is now completely focused on the economy.
Where Are Rates At Now?
Fixed rates are more aggressive compared to adjustable rates. 30 year fixed rate mortgages are at 3.25% (APR 3.385%) and 15 year fixed rate mortgages are at 2.875% (APR 3.120%).
These rates are good for your primary homes and secondary homes. Rental properties come with higher rates; usually up to a .50% higher – a lot depends on the structure of the loan. Adjustable rate mortgages are not that good so you’ll probably want to focused on a fixed rate term (this applies to both refinance and purchase mortgage loans).
Underwriting times are surprisingly fast considering that mortgage rates are near multi-year lows. According to a recent report housing starts were up big in December and builders are excited about the opportunities for more sales as we move into the Spring months.
Having 30 year fixed mortgage rates below 3.50% will be a big boost to the bottom line. Expect home builders to increase their efforts as more buyers jump into the market because of these low interest rates.
What Should We Be Expecting?
When it comes to mortgage rates you should never get too comfortable. At any moment the they could move higher is what most mortgage industry professionals would say. The best the market can hope for is low volatility and continued stability.
With the market moving back to focusing on the economy you’ll want to keep up on the economic reports that come out between now and the end of the month. The market reaction to these reports will give you a sense of what mortgage rates might do as we enter the Spring months.
If the economy is slow then it would not be surprising to see these low mortgage rates continues. If the economy picks up steam then there is a big risk to mortgage rates and we might see them move back above 4.00%. When it comes to mortgage rates; good economic news is not good for mortgage rates.
As always; discuss the market with your loan officer so you’ll know when it’ the right time to move forward. Setting a specific game plan for moving forward in locking is the smart thing to do.