While the federal budget Fiscal Cliff discussions and political posturing in Washington D.C. dominated the financial news headlines on the day before New Year’s, the financial markets decided to be in a cheery mood rather than submit to depression. Given the sentiment, there was no expected run to government Treasuries. Additionally, no economic reports were released that could have caused any sway either, so the market was fully engaged with anticipating the effects of the Fiscal Cliff talks without distraction. Of course, it didn’t hurt that any major news about the politics wasn’t released until three minutes before the market close, so very few had any time to react and take related action in market movements. It wouldn't have made much difference if folks had had more time anyways; most were focused on their entertainment for the evening to ring in the New Year in style.
The Last Mortgage Rate Averages of 2012
In terms of mortgage investments, the mortgage assets were rated “outperform” for the day versus the Treasuries and the stock market itself, which went fairly nowhere for the last day of the calendar year. The 30-year fixed conventional mortgage rate average closed at 3.375% while the 15-year version floated down from 2.85% to 2.75%. On the adjustable rate side, the ARM average rate moved between a low of 2.65% and 3.25%, depending on the institution, creating a fairly wide spread for that type of home loan.
Borrowing Impacts for 2013
The slight drop in rates was no surprise to market watchers. They generally expected a decrease going into the last major holiday of the year before the gloom of January winter kicks in. The period is generally considered a trough and rate increases are expected to manifest by the end of January in a few weeks. Again, many loan officers are noting good opportunities both for the lending side with new accounts and the borrower with great rate opportunities on long-term mortgage applications. Pundits are also expecting upward movement in a bit once the Fiscal Cliff deal is finally set in stone in a few days, making borrowing in 2013 more expensive.