It Seems Nothing Can Make Mortgage Rates Rise
Mortgage rates maintained their winning streak, at 13 weeks at or below 3.5%.
According to Freddie Mac’s weekly survey of more than 100 mortgage lenders, conventional 30-year fixed rate mortgages fell 2 basis points (0.02%) last week, to hit 3.48% nationwide, on average.
Mortgage rates are on a near-record run. Only one other time in history have rates been this low for this long.
It’s the perfect time for mortgage shoppers to capture rates near all-time lows.
15-year mortgage rates are downright cheap, dropping 1 basis point (0.01%) to reach an average of 2.76% with an accompanying 0.5 discount points paid at closing. The much-overlooked 5-year ARM rate decreased 2 basis points (0.02%) to 2.80 percent.
At that rate, an ARM mortgage applicant with 20 percent down could own a $250,000 home for $1,150 per month, excluding taxes, insurance, and HOA dues.
Nearly 9 million existing households can save money with a refinance. First-time home buyers are now finding homeownership cheaper than renting in many U.S. cities.
It’s an excellent time to comparison shop your home loan.
Click to see today’s rates (Sep 22nd, 2016)
Freddie Mac: Mortgage Rates Hit 3.48%
It seems nothing can push mortgage rates above recent lows.
Freddie Mac’s weekly mortgage rate survey shows the average 30-year fixed rate interest rate at 3.48% nationwide, which is close to 50 basis points (0.50%) below the levels from January; and below year-ago interest rates, as well.
It’s the exact opposite of Wall Street forecasts for 2016 mortgage rates.
2016 was supposed to be the year that the Federal Reserve ended its low-rate policy; the nation is showing steady economic growth.
But the Fed continues its slow, cautious stance on rates. A present but limited opportunity exists for today’s mortgage consumer.
Yet, mortgage rates could be facing headwinds.
A much anticipated Fed meeting adjourned September 21. The post-meeting announcement revealed disunity within the group.
The vote to maintain the Fed Funds Rate near 0.25% was far from unanimous.
Three-of-ten voting members advised to raise rates at September’s meeting. That’s the highest number of dissenters in nearly two years, and only the second time in five years there were three opposed voices.
The pendulum is swinging toward higher rates.
The Fed could hike rates as early as the November meeting. But, citing close proximity to the presidential election, most analysts have ruled out a move at that time. Most see a Fed rate increase in December, which would come one year after the last hike.
In general, tighter monetary policy leads to higher interest rates. However, mortgage consumers should not be alarmed.
Freddie Mac, in a recent forecast report, said 30-year rates would hit just 3.7% by 2017. While that would be higher than today’s levels, it would still be an ultra-low rate by historical standards.
The last five years saw some of the lowest rates in history, yet the average over that time period was 4.05%. Rates in the high 3s beat rate levels seen over most of the last five years, and are significantly lower than mortgage rates during prior periods.
Mortgage rate shoppers this year — and probably next — have access to lower rates than in almost any time this decade.
Click to see today’s rates (Sep 22nd, 2016)
Low-Downpayment Loans Affordable Thanks To Rates
Today’s mortgage rates are helping home buyers secure a home at an affordable cost.
First-time home buyers who make a small downpayment are not priced out of the market.
When you put little or nothing down, your loan amount is nearly the entire purchase price of the home. A high loan balance could prove cost-prohibitive if rates weren’t so low.
But, as it stands, a larger loan adds very little to the home buyer’s monthly payment.
For instance, a home buyer selects a home at $300,000 with ten percent down. The principal and interest payment is $1,212 per month.
The buyer, wanting to hold cash, decides to put just five percent down. That increases the payment by just $70 per month while saving the buyer fifteen thousand dollars in upfront costs.
At today’s rates, making a small downpayment, or none at all, could be a very good idea.
How Much Will Your Mortgage Cost Each Month?
30-year mortgage rates are lower as compared to the start of the year, dropping close to 50 basis points (0.50%).
As today’s mortgage rates have dropped, monthly payments have dropped, too — lowering borrowers’ debt-to-income (DTI) ratios.
Debt-to-income is a key part of the mortgage approval process. Any drop in your DTI can make it easier to get mortgage-approved by a bank — for either a purchase loan or home loan refinance.
When mortgage rates drop, it also raises a buyer’s maximum allowable home purchase price. This is because, for the same payment, a buyer can borrow more money.
Use our 3-in-1-mortgage calculator to calculate your payment.
During the last week of last year, a $1,434 payment would cover a mortgage for $300,000. Today, that same loan costs just $1,347 per month — a reduction of six percent.
For every one percentage point drop in mortgage rates, a buyer’s maximum home purchase price increases by approximately 11 percent.
What Are Today’s Mortgage Rates?
Today’s interest rates are still near their best levels of all time, but don’t wait for rates to bottom out. Take a look at today’s live mortgage rates and see what’s possible for your home and your loan.
Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.
Click to see today’s rates (Sep 22nd, 2016)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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