California Interest Rates at a Two Year Low
By Joy BreilingLocal Lender Columnist
May 27, 2008
Recently California 30 year fixed interest rates reached low levels not seen since late September 2005. Despite the increase in the beginning of 2007, interest rates in California have decreased in recent months. In fact, mortgage rates have fallen in seven of the last eight weeks, declining more than half a percentage point since the middle of August.
Influence of the Federal Reserve
The Federal Reserve has recently made several rate cuts in order to prop up the economy. Cuts impact short term interest rates like credit cards, consumer financing, and mortgages with variable or adjustable interest rates by lowering the cost of funds to financial institutions. Expectation of a rate cut influences the bond market and can push long term rates down slightly before the cut takes place.Increase in Mortgage Transactions
As mortgage interest rates fall lenders see an increase in the number of loan applications they receive for both purchases and refinances. In the purchase market, some parts of California (known as micro-markets in the real estate trade) continue to enjoy growth despite growing foreclosure worries throughout the state.The decreasing interest rates are also prompting current homeowners to consider refinancing their current mortgage. According to the Mortgage Bankers Association, about 56% of new loan applications are refinances. With interest rates at a two year low, many homeowners are opting to refinance their adjustable rate mortgage into the more stable 30 year fixed rate loan programs.
The decline in interest rates is welcome news for California consumers shopping for home loans, from stable fixed rates to lower adjustable rate mortgages. When reviewing your purchase or refinance options, consider all the different types of loans and interest rates that are available to you.
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About the Author
Joy Breiling has been employed with the mortgage industry since early 1997. During her career, Joy has fulfilled many positions within the industry including Operations Manager of a large Bay Area broker office. She is currently licensed with the California Department of Real Estate and is an active mortgage originator