Although home mortgage rates continuously go up and down, they have been historically low over the last couple of years. This has enabled more buyers to afford a home. But this summer, the average rate on a 30-year fixed mortgage fell again, this time dropping below 3.50 percent for the first time in recorded history.
The rate on a 30-year mortgage can now be as low as 3.49 percent, which is the lowest since long-term mortgages began in the 1950s. The average rate on a 15-year fixed mortgage, a popular refinancing option, dipped to 2.80 percent. That’s below any previous record. The rate on the 30-year loan has fallen to a record low level, in 13 of the past 14 weeks.
Cheaper mortgages have helped drive an active real estate market. Borrowing money is simply more affordable. For example, if you get a 30-year fixed mortgage today at 3.5 percent, you are going to pay a little over $350 per month for every $100,000 you have borrowed. So if you have a $400,000 loan balance, your monthly mortgage payment should be around $1,500 per month for the interest plus the amount for the principle. Of course you need to speak to a lender or a mortgage broker to get a better and more accurate estimate. But the main point here is that with mortgage interest rates at an all-time low and housing prices significantly down it is an amazing time to buy, particularly if you are renting.
As a result of low mortgage interest rates, housing prices nationally have started to stabilize in many large cities. Builders are more confident and are building more houses than they have in nearly four years. This is an excellent sign for our nation and our economy. Locally in much of San Diego, we have already seen significant price stabilization in the housing market. With regard to buyer activity, there is an extremely active market with tons of buyers pursuing property all over San Diego.
Low mortgage rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend on other goods and services. Many homeowners use the savings on renovations, furniture, appliances and other improvements, which help drive economic growth.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and the uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safer investments. As demand for Treasury notes increase, the yield falls.
Today’s low mortgage interest rates can benefit you directly. If you currently own a home and have a mortgage, you should consider refinancing to get the best rate possible. This can significantly reduce your monthly mortgage payment. If you do not own a home, you should consider buying a home to take advantage of the record low mortgage rates and low housing prices. If you already have a home and a good interest rate, you should consider purchasing an investment property.
Until we meet again, enjoy your home life.
Trent St. Louis is a licensed Real Estate Agent and a member of the National, California and San Diego Associations of Realtors. You can reach Trent at The Metropolitan Group at 619-300-1621 or at SpecialAgentTrent@gmail.com CADRE#01273643.
