Friday, September 21, 2012

How low can they go?

Another week, another drop in mortgage rates. Nationwide, the 30-year fixed rate mortgage is averaging 3.49% nationwide, and the 15-year fixed rate mortgage is averaging 2.77%. Both are all-time lows.

30-Year Fixed Rate Mortgage : 3.49% Plus Points, Closing Costs

At the beginning of each week, Freddie Mac asks more than 100 banks nationwide to report back on the "going mortgage rates" available to prime borrowers, where "prime borrower" is defined as a mortgage applicant with good FICO scores, verifiable income, and at least 20 percent equity in their home.
Banks response are then compiled and published in the form of Freddie Mac's weekly Primary Mortgage Market Survey -- a listing of average mortgage rates available nationwide, and by region.
This week, Freddie Mac reports the average 30-year fixed rate mortgage rate down 6 basis points to 3.49%, marking the second time that the average 30-year fixed rate mortgage rate fell to 3.49% nationwide.
However, as compared to last 3.49% reading (which was 9 weeks ago), this week's reading is more favorable.
In late-July, banks had required borrowers to pay an average of 0.7 discount points to get access to the published 3.49% mortgage rate. Today, that average bank charge is down to just 0.6 discount points, or $100 in closing costs per $100,000 borrowed.
At larger loan sizes, the difference in magnified. Homeowners borrowing at the local conforming loan limit of $625,500 in Loudoun County, Virginia; or, New York City, New York; or, San Diego, California, for example, save $625.50 on discount points as compared to 9 weeks ago.
Today marks the best conforming mortgage rate market in the history of mortgage lending.

15-Year Fixed Rate Mortgage : 2.77% Plus Points, Closing Costs

The 15-year fixed rate mortgage rate moved to new, all-time lows this week, too, falling 8 basis points to 2.77%, on average, marking the largest one-week drop in 15-year fixed rate mortgage rates in 24 weeks.
For homeowners using 15-year mortgages, it's been a great run. As compared to 4 years ago, mortgage rates have -- literally -- halved.
  • September 2008 : 5.64% for the 15-year fixed rate mortgage rate
  • September 2012 : 2.77% for the 15-year fixed rate mortgage rate
Setting these numbers to a real-life example, a homeowner whose 15-year fixed rate $300,000 mortgage started four years could refinance the remaining balance into today's 15-year mortgage rates and realize savings of 33 percent per month -- an astounding figure considering the huge number of U.S. homeowners who have yet to refinance from their respective high-interest rate mortgage rates.
Slowly, though, they are.
Underwater homeowners are refinancing via Harp 2.0 and awareness of low mortgage rates has grown. Homeowners nationwide are joining this 2-year Refinance Boom and saving money monthly -- a positive for U.S. economic growth.

Mortgage Rates : See Today's Mortgage Rates

Mortgage rates are at an all-time low. They may fall further, or this may be it. We can never know for sure. Therefore, if today's mortgage rates fit your budget and your needs, consider locking something in.
Mortgage rates have more room to rise than to fall. Talk to your loan officer, or just get started with a rate quote.