September 17, 2015 – Los Angeles, CA – Today the Federal Reserve held the federal funds rate at the current rate of near zero, where it has been since 2008. So what does this mean for those interested in buying or refinancing a home? In short, if you’ve been thinking of purchasing or refinancing a home, the opportunity to take advantage of low mortgage rates has been unofficially extended.
Though not directly linked, mortgage rates have historically followed the trend of the Fed rate. When the Fed lowered their key interest rate to near zero in 2008, mortgage rates took a dive and have stayed relatively low ever since, which was good news for those looking for a loan (not such great news for high interest rates on deposits).
Given today’s Fed announcement, mortgage rates are likely to stay low, which means those who are in the market for a home should take advantage of the historically low rates that are still available, but maybe not for long. 13 of 17 Fed policymakers still foresee raising rates at least once in 2015 (Source: Reuters).
“Consumers still have time to take advantage of low rates,” says Ray Montague, Director of Product Research at Informa Research Services. “It’s a great time for homebuyers to lock in a low rate.”
For those who have already bought a home, refinancing your current mortgage at a lower rate can also help cut the cost of homeownership. Whether purchasing or refinancing your home, securing a low rate can lower monthly payments significantly, quickly adding up to thousands of dollars of savings over the long term.
If Homeownership is one your goals for this year, financing the purchase with a low interest rate can help you achieve this very exciting milestone. Hurry! Home prices may be on the rise but there are still plenty of opportunities to find well-priced properties. This decision opens a window for buyers to finance it with a great mortgage rate to get the most home for their money.
For example, the monthly payment on a $250,000 home purchase would be $1,266 with a 4.50% mortgage rate. However, the monthly payment drops to $1,157 per month at if you can secure a rate of 3.92%. The 0.75% difference in interest rates could save you $109 per month, which adds up to over $1,300 annually. Over the entire term of the loan, this accumulates to nearly $40,000, which could be put to good use for a number of projects such a dream vacation, starting a small business, saving for retirement, or maybe even funding a college education!
According to Informa Research Services’, the current national average rate on a traditional 30 year fixed mortgage is 4.04% (Source: Informa Research Services Interest Rate Review). Since this is a national average, it means that there may be rates significantly higher and lower than this figure. Nonetheless, it is a good idea to keep this figure in mind when shopping mortgage rates.
One of the best resources to aid in your search for the best mortgage is everyone’s favorite research tool: the internet. Comparison mortgage rate tables are especially useful in finding the best rates in your region for the loan of your choice.