Mortgage Rates Remain Very Low
The most common mortgage rate, the 30-year fixed, is virtually at an all-time low of 3.47% this week. The only exceptions were for brief periods in 2016, 2013, and 2012 where the rates hit 3.41%, 3.34%, and 3.31 respectively (hardly a difference when it comes to the monthly mortgage payment). Those are the only three occasions in the last 50 years when rates dipped ever so slightly below the current 3.47%, according to Value Penguin by Lending Tree.
For a more historical perspective, from 1970 to 1979, 30-year fixed rates ranged between 8% and 10%. Between 1980 and 1989, rates varied between 10.19% and 16.64%. Between 1990 and 1999, rates fluctuated between 6.94% and 10.13%, and between 2000 and 2009, those rates ranged between 5.04% and 8.05%. Lastly, between 2010 and 2019 30-year fixed rates averaged between 3.65% and 4.69%.
For prospective buyers, this represents a powerful incentive to move toward a home purchase while mortgage interest rates are at a historic low. According to Sam Khatar, Freddie Mac’s chief economist explains that with mortgage rates hovering near a five-decade low, refinance application activity is once again surging, rising to the highest level in seven years. In an interview with Realtor Magazine, Mr. Khatar added, “This surge, coupled with strong purchase activity, means that total mortgage demand remains robust, reflective of a solid economic backdrop, and a very low mortgage environment.”
Lawrence Yun, chief economist for the National Association of Realtors, said that although historically low mortgage rates are helping improve the homebuyer’s ability to afford a home or upgrade to a larger one, these low rates may be a short-term trend. Therefore, the real estate industry can’t rely on the current financing trend to boost sales in the long term. “At some point, mortgage rates are going to revert back to normal …”
The chart below will give you some idea of the importance for your wallet of locking in a low interest mortgage rate. As the chart indicates, you can buy the same house and pay wildly different monthly mortgage payments depending on the interest rate you are paying monthly. Making a move at the right time can save lots of money.
30-Year Mortgage Rates Chart
Last year at this time, 30-year fixed mortgage rates were 4.37% (compared with todays 3.47%). Fifteen-year fixed mortgage rates today average 2.97%, compared to last year at this time 3.81%. Finally, five year adjustable-rate mortgages average 3.28% today. Last year at this time that rate was 3.88%.
Clearly timeliness is vital.