30 Year Fixed Mortgage Rate Hit Low Again: Where Is The Bottom?

Mortgage rate drops to 20 month low

Gustan Cho Associates

30 year fixed rate mortgage rates have dropped to a 20 month low.  According to Freddie Mac, 30 year fixed rate mortgage rates have not been this low in 20 months.  Mortgage rates have been consistently sliding on a downward trend this year with a slightly increase last week.  Today’s mortgage rate are at almost historical mortgage rate levels.

Mortgage Rates have been the lowest starting early 2011 and continued to be at historical lows throughout 2012 and into 2013. Then in May 2013, where FHA mortgage rates were at 3.25% and conventional mortgage rates were at 3.5%, mortgage rates started creeping up. Many mortgage loan borrowers did not lock their mortgage rates hoping that mortgage rates will drop again or mortgage rates will have a correction. Unfortunately, that never happened and rates set a new base at 4.0%.

30 Year Fixed Mortgage Rate At 3.59%

Mortgage giant Freddie Mac has announced on Thursday January 5, 2015 that the national average 30 year fixed rate mortgage rate has dropped to 3.59% from last week’s 3.66% national average.  Thursday’s 30 year national average mortgage rate of 3.59% has been the lowest mortgage rate since May of 2013.

15 year national average mortgage rate for a 15 year fixed rate mortgage loan is now under 3.0%.  15 year fixed mortgage rates are at 2.92% this week which is a slight drop from last week’s 2.92%.

 Home Prices Appreciating

Home values and prices have been appreciating year after year, and in some areas, have been appreciating double digits.  Many underwater homeowners who never dreamed of being able to sell their home now have an option of selling their homes and moving on either to a larger home or downsizing.  Many homeowners who purchased their homes in 2010 have seen substantial appreaciation where they have gained more than 20% equity in their homes and can now refinance their FHA home loans to a conventional loan where they can eliminate their FHA mortgage insurance premium altogether.

Other homeowners are taking advantage of the super low mortgage rate as well as the recent reduction of the FHA annual mortgage insurance premium from 1.35% to 0.85% to refinance their current FHA loans.  The average 30 year fixed rate mortgage was at 4.23% about one year ago and the 15 year fixed rate was at 3.33%.  Mortgage rate was not affected in this past October 2014 when the Federal Reserve Boad has ended their monthly bond purchases.  The move to end the bond purchases by the Federal Reserve Board was meant to hold down long term mortgage rates.

What’s Going To Happen With Mortgage Rates

The Federal Reserve Board announced last week that they will not be in a rush in rasing mortgage rates even though the economic numbers look positive and bright.  Due to inflation being at a pace below expected rate, the Federal Reserve Board has decided that they will not inflate interest rates which is great news.  Home date which was announced Tuesday reflected that real estate prices in the United States appreciated at a slightly modest rate in the month of December which signals that are not enough home buyers to spike up home prices drastically.  Home prices appreciated 5% from the prior December which is down from the 5.5% spike of homes recorded in the month of November and is substantially lower than the double digit appreciation recorded the year before.  The substantial appreciation of homes in early 2014 have many first time home buyers sit on the sidelines due to the high home prices.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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