The financial crisis in Europe is giving an unexpected turnout for American homebuyers, as international money looking for a safe haven is coming into the US, pushing domestic mortgage rates to the lowest level of the year and near to 50-year lows.
The US housing market had been suffering increasing mortgage rates for months, triggered by the end of the $1.25-trillion mortgage-securities purchase program coming from the Federal Reserve. Some said that mortgage rates would increase, as the federal government pulled back from supporting the market.
However, many industry observers said that mortgage rates could drift to as low as 4.5 percent this summer from 4.86 percent now, instead of increasing to six percent as many economists projected, making lower payments for Americans purchasing homes or refinancing their mortgages.
The refinance business "exploded" last week, said Jeff Lazerson, chief executive of Mortgage Grader in California. "It’s schizophrenic. We all had this expectation of higher interest rates and no more refinances." He said he helped a mortgage borrower lock in a 30-year loan with a 4.25 percent fixed rate last week, the lowest rate given to borrowers during his 24 years in the business.
The average 30-year fixed-rate mortgage was 4.84 percent last week, according to a survey conducted by Freddie Mac.
Meanwhile, a survey conducted by financial publisher HSH Associates showed that rates quoted late-Friday last week averaged 4.86 percent, the lowest since December 2009. The 15-year fixed-rate mortgage averaged 4.24 percent last week, the lowest level since Freddie Mac started its survey in 1991.