I know I blog about mortgage rates a lot. Partly this is because I just cannot believe how the rates have remained so low for so long. Mortgage rates were unchanged this week and were – yet again – at the lowest point in decades.
The Arizona Republic reported Thursday on the numbers Freddie Mac released that day. The average rate for a 30-year fixed loan is at 4.57 percent. The Republic wrote that “that’s the same as a week earlier and the lowest since Freddie Mac began tracking rates in 1971. The last time home loan rates were lower was the 1950s, when most mortgages lasted just 20 or 25 years.”
I’m sure you have read how the lower mortgage rates have had a very modest impact on home sales and have been more utilized by current homeowners to refinance. It is true that the housing market has slowed since federal tax credits for homebuyers expired at the end of April.
So why does the lower mortgage rates matter? What’s in it for you?
If you’re a buyer –With mortgage rates this low, it’s a great time to buy. For example: say you are interested in purchasing a home for $400,000. By cutting just a half a percentage point from a 30-year loan, you will save $45,000 over the life of that loan.
If you’re a seller – There is a general rule of thumb that every one percentage point decline in mortgage rates is the equivalent of roughly a 10 percent reduction in the home price for the buyer. This will make your home much more affordable to buyers and offer you an opportunity to sell your home for the price you really want. It should also equate to a larger pool of qualified buyers for your home.
If you’re a homeowner – I’ve said it before and I’ll say it again: if you haven’t refinanced already, think about it now.
And how are rates calculated in the first place?
The Arizona Republic put it like this:
To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
If you have questions about mortgage rates or are interested in buying or selling a home, contact me. I’m happy to help.
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