Mortgage Trends This Week: Oct. 4

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Everyone has an opinion on the direction of housing prices, but if you’re listening to your bartender or hair stylist, all you’re really getting is a cold beer or your monthly perm.

The professionals who put their time in the housing market are the ones worth listening to. Standard & Poor’s Case-Shiller home value index is a good example. These days, the index is bullish.

Case-Shiller is talking about a number that few others are: 17 straight months of rising home prices. From June to September, U.S. home prices rose by an average of 4%.

The Index is a snapshot of the national real estate scene, and we all know that all real estate is local, but 17 months of overall rising home prices is nothing to sneeze at.

One other piece of interesting news, before we get to this week’s mortgage rates: The Internal Revenue Service reports that the homebuyer tax credit may have been a double-edged sword. While it allowed many U.S. homeowners to get a good deal on a home purchase – something that pumped up the real estate market until the tax credit ran out in September – it also cost U.S. taxpayers $23.5 billion.

That’s the amount of money the IRS paid out for the tax credits, and it breaks down like this:

  • New homebuyers tax credit (Recovery Act) - $16.2 billion (including both the $8,000 and $6,500 tax credits).
  • Interest-free loans via the Housing Act - $7.3 billion.

A good chunk of the tax breaks went to the areas hit hardest in the bursting of the housing bubble. California received $814 million; Florida got $455.5 million; and Uncle Sam saw $288 million in tax breaks. Per resident, Nevada saw the biggest tax advantage, at $104 million.

Politically, there’s no populist push for another round of the homebuyer’s tax credit. With the U.S. drowning in personal debt, voters don’t seem interested in adding billions more to the national deficit. But the upcoming November elections could be a big referendum on that issue, which would surely impact the mortgage market going forward.

For the week, mortgage rates jumped only in one category – the 30-year-fixed rate. Otherwise, rates were down in each of the main mortgage categories, as measured by the BankingMyWay Weekly Mortgage Rate tracker. Here’s a look:

Description                             This Week                   Last Week

One-Year ARM                       3.742%                        4.029%

Three-Year ARM                     3.803%                        3.815%

Five-Year ARM                       3.384%                        3.487%

15-Year Mortgage                    3.962%                        4.009%

30-Year Mortgage                    4.518%                        4.477%

If you’re looking for a new home, there’s rarely been a better time to pull the trigger, with rates this low. To get the best deals on the market, check out BankingMyWay’s Mortgage Rate Search. Week to week, it’s your best bet for finding the best mortgage rate deal possible.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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