Mortgage rates fall to near record lows this week

Today, mortgage rates fall once again to  near record lows again. A 30-year mortgage rate this week has dropped to 3.38% compared to 3.4% last week.  This week’s rate is slightly above the record low that was reached in November at 3.31%, which marked the lowest rate on record dating back to 1971. A 15-year mortgage remained unchanged this week at 2.65%. The record low for a 15-year mortgage is 2.63%. With rates so low at this time, any bit of inflation can push them higher.

Last month, the Fed said they would keep interest rates near zero until the jobless rate falls to 6.5 percent and as long as the central bank believes inflation will stay below 2.5 percent. At this point, inflation remains flat. Labor Department reported on Wednesday, CPI was unchanged last month thus with this new data, inflation will continue to remain flat and not hit the Feds threshold to raise interest rates.

Construction rates have also increased as builders began to build 780,000 homes just last year -- up 28.1% from 2011, when new home construction hit a record low, the lowest since 2008. Although, increases in construction became a part of the housing recovery last year, it hasn’t made a significant contribution to the hiring. With these reports, increased construction rates have made investors more optimistic about the US economy.

With the unemployment rate projected to fall lower this year and home sales expected to rise at a rate similar to last year's, interest rates are projected to remain relatively low throughout 2013. Assuming the uncertainty of the fiscal policy, debates during the first quarter fails to disrupt the economic expansion and the U.S. should see about two million new jobs created this year.

We are most definitely amidst a period of financial uncertainty as the government deals with fiscal cliffs, debt ceilings and increased tax rates, these uncertainties have caused rates to fluctuate over the past several weeks. Banks are increasing mortgage lending in Southern California, so this is an excellent time for buyers.  These lower mortgage rates will help strengthen the housing market and road to recovery and we will start to see inventory levels rise.