Mortgage rates fell this week to the lowest level on record, giving consumers added incentive to lock in low payments on home purchases and refinancings.
Mortgage company Freddie Mac said Thursday that the average rate for 30-year fixed loans sank to 4.69 percent, from 4.75 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971. The previous record of 4.71 percent was set in December. Rates for 15-year and five-year mortgages also hit lows.
Mortgage rates have fallen over the past two months. Investors wary of the European debt crisis and the turbulent stock market have shifted money into the safety of Treasury bonds, driving down yields. Mortgage rates tend to track the yields on long-term Treasury debt. Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
Rates on 15-year, fixed-rate mortgages fell to an average of 4.13 percent, the lowest on records dating to September 1991 and down from 4.2 percent a week earlier. Rates on five-year, adjustable-rate mortgages averaged 3.84 percent, down from 3.89 percent a week earlier. That was also the lowest on Freddie Mac’s records, which only date back to January 2005. Average rates on one-year, adjustable-rate mortgages fell to 3.77 percent from 3.82 percent. That was the lowest average since May 2004.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year, 5-year and 1-year loans. The average fee for 15-year loans was 0.6 of a point.

The final numbers for 2009 are in and as expected the overall results were quite positive for the Orlando area Real Estate market. We saw a 59.31% increase in sales over the same period for 2008, The inventory of homes dropped by 25% , the number of properties under contract more than doubled, the average days on market decreased to under 90 day.  There are all positive indicators that show the housing market trying to correct itself and recover.  We are in no means out of the woods just yet. Banks are predicting 2010 to be another big year for foreclosures as 5 year arm loans written in 2005 become due. Another factor that may affect this recovery is that the local unemployment rate is hovering around 11.8% as of November 2009 which is a big jump from the same period in 2008 of 7.4%. Mortgage rates are also a key factor in the market recovery. Currently mortgage rates are holding at 5.0% – 5.25%. Low rates are allowing first time home buyers to enter the market where several years ago they were unable due to higher rates and high home prices.

Lower inventories of homes should help stabilize property prices for 2010 as long as there is not a big influx of bank owned or foreclosure properties. This will be decided by the banks as they are now watching inventory levels to see when is the best time to list bank properties for sale.

Investors and second home / vacation home buyers will play a key role in the Orlando market for 2010. Over 25% of all transactions in the State of Florida were from outside the country. Foreign National Buyers see Florida as a great investment and should continue to purchase in 2010 as prices remain at or below current market prices.  We should expect 2010 to play out the same as 2009 as long as there is no new major economic shift.  Buyers should take advantage of the current market and purchase before the shift in foreclosures begins to decrease. The inventory of these properties is still very good. As these numbers decrease so will the quality of the foreclosures. Make 2010 the year you purchase your first home or a vacation property.

As signs of the economy begin to improve the Federal Reserve board is expected to keep Key Rates at historic lows. These key rates are what the treasury charges banks to borrow money then in return the Banks loan this money to customers and businesses. The Fed had hoped that by keeping rates low that it would spark consumers to start spending more and stimulate the economy. Currently the Fed charges banks between zero and 0.25% for the lending rate. The Banks prime lending rate which is used to set rates on credit cards, home equity loans, and other consumer loans should then stay around 3.25% which is the lowest in decades.

All this sounds like great news but with Banks reluctant to loan and in some cases still pulling back lending in certain segments of the marketplace. It is hoped that with these low rates that banks will begin to free up more credit for consumers. The Fed is also reviewing rescue programs that were put into place to help spur spending. With the economy still frail we may not see any changes in these programs until there is stronger economic news and unemployment begins to drop.

All signs from the Fed indicate that we can expect rates to stay low until the end of the year and possible into the first quarter of 2010. With the worst past us now we are in the slow process of recovery. What will the next move from the Fed be? No one knows for sure but base on the current condition of the economy we can expect very little or any movement on the fed key rates.