Mortgage Rates Hit Low Since 2013

Mortgage Rates Hit All-Time Low Since June 2013

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article On Mortgage Rates Hit All-Time Low Since June 2013

Mortgage Rates Hit All-Time Low Since June 2013 despite the high unemployment due to the coronavirus pandemic. The housing market is booming despite the economic crisis due to the COVID-19 pandemic. One of the factors triggering the booming housing market is low mortgage rates. Mortgage rates keep on dropping. According to Freddie Mac, mortgage rates dropped under 3.0% on a 30-year fixed-rate mortgage this week. The flood of new mortgage applications on purchases and refinances is creating a manpower shortage for lenders. A large percentage of lenders have halted taking new mortgage loan applications due to the overcapacity in applications and shortage of support and operations staff. Gustan Cho Associates is at full capacity and is hiring floods of processors and mortgage underwriters.

Fredie Mac Rates

Freddie Mac has announced in their mortgage report that the average 30 fixed-rate conforming mortgage rates have set an almost 2 year low.

Will Rates Continue To Drop?
Mortgage rates

Mortgage rates on 30-year fixed-rate mortgages are in the 2% range. The Central Bank lowering rates to zero had a big impact on rates. How much lower can mortgage rates go? Will the Federal Reserve Board lower rates below zero?

  • The average 30 year fixed rate mortgage rates have been plummeting for the third wee in a row as the yield on bonds consistently continued to drop
  • Mortgage rates have been dropping even with very strong economic and employment news
  • The average 30-year fixed conforming mortgage rate is at 2.96%, which has been the lowest since April 2013 where the average mortgage rate was at 3.25%
  • 15 year fixed mortgage rates on conforming mortgage loans are now below 3.0%

15 year fixed rate mortgages did not trade below 3.0% since June of 2013.

Other Statistics On Mortgage Rates Hit All-Time Low

The Mortgage Bankers Association, also referred to as MBA, also announced that refinance mortgage applications were up over 65% and purchase mortgage loan applications are up 25% since May of 2013.

  • This is a huge increase
  • The low mortgage rates are not the only reason for the sudden boost in the purchase and refinance mortgage applications
  • Since the real estate market crash and the credit collapse of 2008, many home buyers who got in after the economic collapse have been experiencing double-digit appreciation in their home values
  • Homeowners who had underwater mortgage loans, where their balances were higher than the market value of their homes, now has seen the light at the end of the tunnel
  • Homeowners who had upside mortgage loans never imagined that they will recover from the loss of their home equity
  • Homeowners with underwater mortgages thought that they would be stuck in their homes for the rest of their lives

Fortunately, many homeowners with upside mortgage loans now have the option to sell their homes and purchase a different home or can now refinance their homes or even get a cash-out refinance mortgage loan.

Victims Of 2008 Economic, Real Estate, And Credit Collapse
Victims Of 2008 Economic, Real Estate, And Credit Collapse

Never in history have real estate values collapsed as it did back in 2008.

  • The real estate market disaster has not just affected the real estate market but has created the worst economic depression since the Great Depression
  • Some analysts believe that the financial collapse of 2008 was worse than the Great Depression
  • The real estate disaster has wiped out whole industries and had many other industries, like the mortgage industry, go through a total overhaul of their system and how they do business
  • Over half of the mortgage companies have shut their doors overnight

Subprime mortgage loans and stated income mortgage loans instantly became dinosaurs and are no longer in existence.

The Real Estate Meltdown And How It Affected Americans

The value of homes has tanked more than 50% in some areas of the country and unemployment rates have soared to double digits.

  • Mom and pop shops have closed their doors after decades in the business and you can notice on every neighborhood that strip malls were vacant
  • Bankruptcy rates have skyrocketed and foreclosure rates have hit historical highs
  • A large percentage of businesses have closed their doors
  • Homeowners who have owned their homes for years and had equity in their homes where they were going to rely on their retirements have witnessed their equity evaporate

Again, tens of millions of hard-working Americans have filed bankruptcy, had a foreclosure, had a deed in lieu of foreclosure, or had to do a short sale.

Recovery From The Great Recession Of 2008
Recovery From The Great Recession Of 2008

Those folks who had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale have since recovered and have met the mandatory waiting period to qualify for a mortgage loan.

  • These folks can now qualify for a residential mortgage loan and make up a large portion of home buyers
  • The demand for homes throughout the country has created a demand for homes which in turn have skyrocketed values of homes
  • The housing crisis seems like it is now over and has stabilized
  • Areas of Florida, California, Illinois have seen double-digit returns on home values year after year since 2010
  • Even with this type of appreciation, we are far away from the real estate values that were peaked in 2008 and there is room for much more appreciation
  • First time home buyers should definitely think about pulling the trigger in buying a home and becoming a homeowner instead of sitting on the sidelines to see a real estate market correction

With mortgage rates being at a 2 year low and FHA just lowering the annual mortgage insurance premium form 1.35% to 0.85%, right now could not be a better time for homebuyers to get qualified to purchase a home.

Mortgage Rates Hit All-Time Low With Lower FHA MIP

More great news for homebuyers besides mortgage rates being at a two year low.  HUD, the parent of FHA, has announced that they will be lowering the annual FHA mortgage insurance premium from 1.35% to 0.85% effective January 26, 2015.  This is a huge saving for FHA loan borrowers on a 30 year fixed rate FHA mortgage loan.

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