The ongoing turbulence in the world economy continues to impact the mortgage market. As a consequence, mortgage rates, property values and numerous other factors keep changing. Recently, mortgage rates in Boston fell again. Rates are not currently showing indications of inching up either. According to recent surveys, the rate for 30-year fixed-rate mortgage has fallen to 4.65% from 4.72% in Boston. Nationally, the rate for 30-year fixed-rate mortgage is 4.66%.
Additional movement for mortgage rates in Boston is present. The rate for 30-year jumbo mortgages for a loan of around $465,750 was 4.86% a few weeks back. It has recently dropped to 4.77%. For the 15-year fixed rate mortgage, rates have fallen to 3.66% from the 3.77%. The rate for 5/1 adjustable rate mortgage (ARM) has also come down slightly to 3.34% from 3.36%.
Mortgage Rates in Boston, MA
The drop in mortgage rates in Boston, relatively speaking, is not terribly severe, however, there is no positive sign of improvement in the market either. In such circumstances, banks are planning to focus on property purchase rather than refinancing. This is considered to be a strange decision according to numerous market experts. According to the banks, the overall market condition in Massachusetts has forced them pursue a refocused effort on purchase versus refinance.
On the other hand, property value continues to increase in Boston, and sales velocity is at some of the highest levels the market has ever seen. Boston has seen home sales prices increase by 10%, outpacing any similar gains seen at the national level where data shows a 6% increase. Needless to say, this increase in value contrasts the market trend of the previous years.
Market experts are focusing on property values in Greater Boston. The drop in values in Greater Boston was less dramatic right after the housing bubble burst than the remainder of Massachusetts or the rest of the nation for that matter.
Boston Property Values Rise, Inventory Low
Immediately following the sustained economic progress and industrial development, sale prices increased in Boston. While the increase in value is considered to be beneficial for Boston sellers, buyers are faced with low inventory and bidding wars – we’re seeing sale prices greater than list prices for South Boston condo sales over the past 6 months.
Apart from general mortgage rates, there are additional significant changes in the commercial mortgage market also. However, changes are not that positive. By the second quarter of 2013, returns on commercial mortgages owned by life insurance companies dropped by nearly 1.92%. Total income was around 1.29% and the expense was 3.21% in the second quarter of 2013 with higher mortgage spreads serving as the main reason behind the loss.
It’s definitely not easy to predict whether the mortgage market in Boston is going to be stable in the coming months or not. As for now, increasing property prices, reduced mortgage rates, and low inventory levels of property listed for sale in Boston create an interesting dynamic not seen for more than 7 years in the Hub.