The average 30 year fixed rate mortgage should close the week around 4.85%. This is slightly above the all time low of 4.71% posted the week of April 2, 2009.
Ten years ago the average rate was 6.92%. The all time high was 18.45% in October 1981. Can you imagine that!!!! To get an idea of the pricing impact: Assume that you are in need of a $250,000, 30 year, fixed rate mortgage. At 4.85% the monthly principal and interest payment would be $1,319; at 18.45% the payment would be $3,860 a difference of $2,541. That’s about $440,000 more in interest over the life of the loan!!!!
Unfortunately for home builders and sellers these historically low rates have not translated into a significant increase in home sales. There was an article on MSN today titled “Ten companies that could go bankrupt” (http://articles.moneycentral.msn.com/Investing/Extra/10-companies-that-may-go-bankrupt-this-year.aspx?page=2). One of these companies was Beazer Homes, one of the largest homebuilders in the country.
In recent months 80% of home loan applications were from borrowers seeking to refinance. In March alone Fannie Mae refinanced $77 billion in loans. This was almost twice February’s refinancing volume and the most in in one month since 2003.
Keep in mind that qualifying for a home loan remains tough. The 4.85% rate is only available to those with the very best credit.
Tags: askmeme, homewowners connect, loan modifications, mortgage news, mortgages, refinancing