How Low Can Interest Rates Go? Photo Credit: www.FlightGlobal.com
Another housing record recently made the news… Freddie Mac announced on Wednesday that the average on a 30-year fixed-rate mortgage fell to 4.78%, matching a record set in April. At the same time, they announced that the 15-year fixed rate on mortgages also fell, from 4.32% to 4.29%, its lowest reading since 1991, when Freddie Mac first started tracking that figure.
This, added to the overall drop in loan applications, leaves the door open for another interest rate drop in the next few weeks, despite the immediate bounce that the industry experienced immediately after the government extended the $8,000 tax credit program and added an extra $6,500 credit for trade up buyers (the original credit was for first time home buyers only).
This is either boon or bust, depending on whose side you’re on. For potential home owners, this is a great catalyst in helping them decide on whether the time is right to buy a new home or to upgrade to a better home. It’s also a nice boon to real estate brokers, as they immediately see an increase in potential customers looking into the new lower interest rates.
For lenders, it’s a mixed bag. The prospect of being able to talk with more customers to potentially qualify them for home loans is negated by the fact that lower interest rates means that there’s less of an overall demand for credit; they’re making less money from lending. In addition, lower interest rates mean that there’s less money to be made from savings accounts and less people are inclined to deposit money with banks.
The best lenders still seem to be smaller banks and credit unions. According to BankRate.com, the rate from large lenders dropped to 5% from 5.06%, which is still the lowest rate in their 24-year history. For borrowers, this means shop around for the best deal possible.
See Also:
30-year mortgages match all-time low
Freddie Mac: Avg 30-year fixed mortgage rate 4.78%
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The low rates are just one reason why it’s a great time to buy now. I think most buyers are little jaded because we have had low rates for so long now. Wait til they start to go back up…
My wife & I purchased our first home this year in Avon, Indiana (near Indy) I agree… it’s a perfect time to buy with the prices so low and rates so low.
Ryan@Avon Indiana Real Estate´s last blog ..2009-2010 – First Time Home Buyer Tax Credit
The time to buy is now!!! Especially a brand new Adams & Marshall home!
Wow, rates and terms like this are unheard of in the Uk or in Spain! In the Uk most clients fix for between 2 -5 years