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Mortgages Swoon To Lowest Level Since June
By Polyana da Costa • Bankrate.com
Mortgage rates tumbled this past week as economic data disappointed investors. Concerns about the nation’s debt ceiling lingered, even after Congress reached a temporary deal.
This is the lowest level the 30-year fixed has reached in the last four months, according to Bankrate’s weekly survey.
Why are rates falling?
When the shutdown ended last week and Congress sealed an agreement to fund the government until January, some industry observers feared mortgage rates would rise. Instead, mortgage rates dived as investors digested the news that the U.S. debt ceiling debacle has merely been postponed.
The Labor Department released the September employment report this week, and it was disappointing at best. The economy added only 148,000 jobs during that month. That’s at least 30,000 fewer jobs than economists had expected.
The Fed is on hold
The weak employment report helped push rates down, as it was another indication that the Federal Reserve will not pull back on the economic stimulus program this year. The Fed says it will begin to cut back on the $85 billion-per-month bond-purchasing program once the labor market is strong enough.
Where are rates headed?
I expect mortgage rates to stay somewhat stable until the end of the year.
Rates might even drop a little more as the debate over the debt ceiling heats up again and if economic reports continue to point to a weak economy.
Borrowers: Don’t be greedy
Don’t expect rates to tumble back into the 3 percent range, maybe we get another .25%
Refinancers and homebuyers should take advantage of the extra time and lock as soon as they feel comfortable with the rate and the deal they are getting, mortgage professionals say.
Several factors will put upward pressure on rates early next year, including the new deadline to raise the debt ceiling, the possibility that the Fed will trim the bond-purchasing program then and new mortgage rules that go into effect January.
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