If you have a good job, a good credit score and a significant down payment for a home, now is probably the best time to get that house you’ve been wanting because mortgage rates are at all-time lows.
Few people thought it would ever happen, but mortgage rates are now below 4 percent. That’s right – below 4 percent. For the average 30-year fixed mortgage, buyers who qualify can expect to pay 3.94 percent over the term of their loan. That’s a 0.07 percent drop from last week’s 4.01 percent, which was also a record low. If you’re looking for a 15-year fixed rate mortgage, the news is even better. Qualified applicants can expect to pay 3.26 percent.
Today’s mortgage rates are even lower than they were during the early 1950s. During that time, the lowest rates stood at about 4.08 percent. That was when most mortgage terms were only 20 to 25 years.
Although mortgage rates have only been above 5 percent for two weeks in the past year, it hasn’t been enough to bring the housing market out if its slump. The sales figures for existing homes this year are predicted to be the worst figures in more than a decade. In addition to that, the number of people who own homes in the past decade is at its lowest since the Great Depression.
According to Celia Chen, the director of housing economics at Moody’s Analytics, there is an expectation that there will be more people buying homes and refinancing their current mortgages. But with the lack of jobs and the difficult underwriting standards, the number of new homeowners probably won’t increase by much despite the unbelievably low mortgage rates.
John Stearns, a senior mortgage banker at one of the national banks, said that his bank has been rejecting huge piles of applicants in recent years because of their low credit scores. Banks haven’t only been insisting on higher credit scores, but they have also been requiring at least a 20 percent down payment on homes for first time home buyers in order to even be considered for a mortgage loan. Mike Anderson, a mortgage broker in Louisiana, said the low rates still haven’t changed the obstacles that are preventing people from getting home loans. If you don’t have a job or a good credit score, the mortgage rates could be 0 percent and it still wouldn’t matter because of the strict qualifying standards.
The average mortgage rates aren’t the only thing that has declined in the past week. The number of mortgage applications has also dropped by 4 percent when compared with last week’s numbers. The number of people applying to refinance their home has also fallen by about 5 percent.
Still, the lower mortgage rates could help the economy if a large number of current homeowners decide to refinance their home. By paying a lower interest rate, they can spend more money each month which puts more money into the economy. A person with a $250,000 at 5.09 percent for a 30-year term can save about $2,000 each year by refinancing at today’s low mortgage rate.
This opportunity to take advantage of these low mortgage rates is probably a once-in-a-lifetime opportunity. It’s too bad that so few people can take advantage of it.