Well, the news this week on mortgage rates indicates that rates are down because of low job growth. Keep in mind though that rates are still higher than they were last year at this time. The 30-year fixed-rate mortgage (FRM) averaged 6.62 percent, with an average 0.5 point, which is down from last week's average of 6.67 percent; however, at the same time last year, the 30-year FRM was 5.56 percent on average. So, the rates are up a full percentage point from last year.
Will they drop further? It depends. The Federal Reserve is keeping an eye on a couple of factors: The Producer Price Index (PPI), and the Consumer Price Index (CPI). These indexes will give a much better idea of what is happening with inflation, than even the current job growth numbers.
In any case, continuing interest rate drops -- however small -- show that there is some optimism out there that lending rates may be on a downward trend. It's good news for folks with ARMs that are coming up for adjustment.
We'll all see what happens later in June, when the Fed meets again to determine what next actions they take.
Michael
