For many consumers 2012 has been the year of the recovery. Yet for others the illusion remains due to unemployment or financial issues. For those who can credit qualify and property qualify for a traditional standard 30 year Fixed Rate Mortgage will end 2012 at 3.350%. In the weekly rate survey published weekly by industry giant Freddie Mac, today’s report is good news. Year over year, the rate has dropped .60% or six tenths of one percent. The data represents a positive trend line but in reality mortgage rates are pretty constant so it is more significant to determine blended metrics or other critical data as a basis of economic direction.
A positive trend
For those who aren’t lucky enough to qualify for a traditional mortgage, hope is offered as many lenders are participating in the Obama administration “Making Homes Affordable” programs which are designed to keep homeowners in their home despite not having sufficient equity or other factors which prohibit taking advantage of the attractive rates. It is still noteworthy that many more desire to take advantage of the market but for various reasons are unable to grab what otherwise is the key to financial stability. That is why today’s report as well as other news recently released gives optimism for the future because as consumers work on correcting credit issues or property issues, in time these items are correctable.
The new rates have allowed millions to shave their mortgage payments which have resulted in direct economic stimulus.
What would you do with a $708 gift? For some, it may be increasing their savings or other investments. For others, it may be paying down debt. Then for others, it may allow them to purchase household items such as a new computer, more advanced smartphone or other consumer purchases.
Using today’s report, assuming an average mortgage loan balance of $175,000 the 3.350% rate would yield a payment of $771. This time last year, the same mortgage would have offered a rate of 3.950% which yielded a payment of $830. The difference of $59 per month is how the $708 annualized windfall is calculated.
Speaker of the Senate Harry Reid to Speaker of the House John Boehner, “‘Take the escape hatch we left you,”
Of course while the mortgage rates, new housing starts and improved jobless claims give reason to bring in 2013 with cheers, it could all be dampened unless politicians come to their senses and avoid the economy from “falling off the cliff.” While there is pessimism about a compromise being reached prior to the December 31st deadline, yesterday President Obama had a conference call with all leaders to “get the job done.” He has once again cut his holiday vacation short and today members of Congress are being summoned back to Washington to avert what could negatively impact the Government as well as consumers.