Mortgage rates, according to bankrate.com have hit their lowest level in 2 years with conventional 30 year mortgages now averaging 5.87%, while the jumbo has ticked to just under 6.5%. With an impending rate cut, and perhaps several more, the trend looks to be well established. Rates are actually right on target with my projection from the beginning of the 4th Quarter, when it was said on this blog October 4th, 2007:
"The 30 year jumbo mortgage rate is trending down. After a pop to 7.25% in August, the average rate now stands at 6.875%. While the spread between jumbo rates and the 10 year t-bill has narrowed, there is still a long way to go. The Libor rate has dropped by 1/2 of a point in the same time frame, and commercial paper yields backed by mortgages have dropped 1%. With another fed cut likely before the end of the year, and a slowing national economy, it looks like this trend will hold, and 30 year Jumbo rates should drop to 6.5% and possibly less by January."
At this point I would look for jumbo rates to drop to 6% by April, possibly a tad lower, and conventional rates will likely drop to 5.375% or less.
While the Manhattan market has held up remarkably well, there are still many challenges ahead in this election year. Fortunately, rates are not an issue, and this trend continues to drive the dollar lower and drive foreign investors into the Manhattan market. Additionally, such a trend in rates could help reduce the impact of the mortgage/foreclosure crisis nationally, as lower rates will increase refinancing activity and reduce the occurrence of foreclosure. Again, there are many challenges, but lower rates are a big help.