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Mortgage Rates: A New Three-Year Low

May 23rd, 2016 5:05 AM by Jackie A. Graves, President

Mortgage rates continued their downhill slide this week, falling to a three-year low of 3.57 percent on a typical 30-year fixed loan. That’s a drop from 3.61 percent last week and an average 3.85 percent a year ago, according to Freddie Mac.

 

The last time home loans were this cheap, Icona Pop was working its way into our ears and we couldn’t wait for Iron Man 3.

Source: Freddie Mac

It can’t be said enough, home loans are an incredible bargain right now. We’re not far from the all-time record low of 3.31 percent, which we hit right before Thanksgiving in 2012. This historic run of cheap borrowing has been a boon to the housing market.

 

Is it possible that mortgages are too cheap? Some people think so. This week, two regional Fed leaders repeated their worries that this long run of super-cheap borrowing could spell trouble.

 

“Just as raising rates too quickly can slow the economy and push inflation to undesirably low levels, keeping rates too low can also create risks” by prompting businesses and people to take on too much debt, Kansas City Fed President Esther Rosengren said. “We witnessed this during both the housing crisis and the current adjustments in the energy sector.”

 

The Fed has signaled that it’s likely to raise rates twice before the end of the year. So far they haven’t moved once. They meet again June 14-15.

 

Still, after last week’s disappointing jobs report, Fed watchers are betting against a rate hike next month.

 

Remember, the Fed doesn’t control mortgage rates, but what they do can affect borrowing costs. For now, here’s the big picture.

By Lorraine Woellert, Contributor - To view the original article click here

Posted by Jackie A. Graves, President on May 23rd, 2016 5:05 AM

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