Interest rates on home mortgages, which shot up dramatically late last week from historic lows amid turbulence in world financial markets, began to creep back down Tuesday--at least for borrowers in Southern California.
The news comes as welcome relief for consumers hoping to take advantage of attractive mortgage rates to refinance their loans or buy homes. It also should keep intact many real estate deals that would have unraveled if interest rates had continued to climb.
"Usually, when there's rapid movement in either direction, there's kind of a rebound effect," said Earl Peattie, president of Mortgage News Co. of Morro Bay, which tracks home-loan rates in Southern California. "That's what we saw today." But he cautioned: "We need to see what happens in the next couple of days."
On Tuesday, the mortgage-backed securities market, which influences mortgage rates, stabilized after Friday's sell-off. And rates for the average 30-year fixed-rate mortgage charged by the 15 largest Southland lenders dropped virtually across the board.
For instance, the average rate on a 30-year fixed-rate mortgage with a fee of two "points"--or 2% of the loan amount--slipped back to 6.61%, according to Mortgage News. (This was for loans of $227,150 or less.)
While that's still way above the 6.17% reported Oct. 5, it is a sharp pullback from Friday's average midday rate of 6.76%.
Countrywide Home Loans was among the lenders that dropped rates. Its 30-year fixed-rate conforming loan, with 2.5 points, fell from 6.75% on Friday to 6.625% on Tuesday.