Why Are Mortgage Rates Still Low?
According to data provided by Freddie Mac, current mortgage rates are not adhering the forecasts by industry experts that called for higher rates in 2010.
15 year fixed mortgage rates are in the 4.25% range, their lowest rates since April of 1991. 30 year fixed interest rates have been averaging around 4.8%, still at the one of its lowest points historically. 1 year adjustable loan rates have dropped to their lowest level this year. Five year adjustable mortgage rates have also remained fairly consistent.
Current interest rates are holding at historic levels still. In fact, rates on 15 year fixed-rate mortgages recently set another record low rates. Mortgage credit conditions are also improving. Homeowners who were up to date on their mortgage payments outnumbered borrowers who were defaulting on home loans.
Economists had expected mortgage interest rates to rise in 2010, beginning with the Federal Reserve’s completion of $1.25 trillion mortgage-backed security purchase program. However, since then mortgage rates have continued to remain low. Between late March and the beginning of June, mortgage rates for 30 year fixed loans have dropped 0.2% and 15 year fixed rate mortgages have gone down 0.14%.
Why are Mortgage Rates Still Low?
Some mortgage industry professionals are concerned that these rate drops may not necessarily be a good sign for our economy. They think that mortgage rates are not rising because of the effects of the European economic crisis is pushing investors to more reliable U.S. mortgage investments, which can keep rates low.
It’s worth noting that mortgage rate declines in the past have proven fleeting, with rates moving higher after potentially permanent economic solutions have been identified.
While these low rates are good news for buying or refinancing a home, it’s also worth noting that not all borrowers will have equal opportunity to lock-in these low rates. In order to actually get the lowest mortgage rates available, borrowers typically will need a credit score of at least 720 and a significant down payment for a home purchase, or sufficient home equity to refinance.
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Written by R. Smith: Mortgage Refinance, Compare Mortgage Quotes, New Homes San Diego
July 29, 2010
Tags: mortgage, mortgage rates Posted in: Off Topic
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