Mortgage Rates Sink to a New Record Low
Tips & Trends
From Rory S. Coakley on some of the latest real estate news and happenings.
According to Freddie Mac, one of the nation’s largest backers of mortgage securities along with Fannie Mae, mortgage interest rates have fallen to a new record low.
The 30-year fixed-rate mortgage interest rate dropped to an average of 3.67 percent in the week ending June 7, which is the sixth consecutive week of decline. The 30-year rate is down from 3.75 percent in the prior week, and well below the 4.49 percent rate of a year ago. The new low allows borrowers to save more than $47 a month for every $100,000 borrowed – over the course of a 30-year term, that’s over $16,756.
“Interest rates have been on a one-way elevator trip to the cellar,” said Mike Larson, housing market analyst for Weiss Research. “We have never seen rates this cheap.”
Freddie Mac said the average rate for a 15-year mortgage – which is popular for refinancing – dropped to 2.94 percent compared to 2.97 percent in the previous week and the average rate a year ago of 3.68 percent. The new low could mean more than $689 a month in savings for every $100,000 borrowed.
The low mortgage rates are happening as home prices hit new post-bubble lows, according to the S&P/Case-Shiller home price index of 20 major markets – home prices have not been this low since mid-2002 – making this the perfect time for homebuyers.
A survey by the Mortgage Bankers Association showed demand for purchase loans for the week ending June 8 was up a seasonally adjusted 13 percent from the week before, and up 4 percent from a year ago.
Although requests to refinance accounted for eight out of 10 mortgage applications, demand for purchase loans was at the highest level in more than six months, the MBA said.
Much lower home prices, along with affordable mortgages, should help to bolster the housing market, but don’t expect a vigorous recovery to follow, said Mike Larson.
Sources: CNN Money, money.cnn.com; Inman News, inman.com
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