White house on top of money
A funny thing’s happened to mortgage rates this year. They’ve gone down. Every expert we spoke with said mortgage rates had nowhere to go but up in 2014. We started the year with the average 30-year, fixed-rate mortgage — the most popular way to finance a home — costing 4.69%. The consensus among economists and industry analysts was that it would rise to 5.5% by the end of the year
So what’s happened? The average price of a 30-year, fixed-rate home loan has pretty steadily declined reaching a 2014 low of 4.01% in our most recent survey of major lenders.
Indeed, we haven’t seen home loans this cheap since May 2013. The typical 30-year, fixed-rate home loan costs nearly a half point less than this time last year, which saves borrowers $30 a month for every $100,000 they borrow.
And that’s just looking at the average cost of financing a home.
Savvy borrowers with decent credit can almost always pay a quarter to half point less than that.
Spend a few minutes searching our extensive data base for the best current mortgage rates from dozens of lenders in your area. You’ll see what we mean.
Type of loan Current average Record-low average Established
30-year fixed rate 4.01% 3.50% Dec. 5, 2012
15-year fixed rate 3.23% 2.75% May 1, 2013
30-year fixed jumbo 4.09% 3.93% May 1, 2013
5/1 ARM 3.09% 2.63% May 1, 2013
Why did everyone think mortgage rates were going to go up this year?
The Federal Reserve is ending its campaign to drive down long-term interest rates, including mortgage rates.
The nation’s bank-for-banks began buying $85 billion worth of debt a month in September 2012, a fairly even split between Treasury bills and bonds backed by thousands of home loans.
By flooding the mortgage market with money, it pushed mortgage rates to record lows in an attempt to boost real estate sales and property values.
In a process the Fed refers to as tapering, it reduced those purchases to $75 billion in January, $65 billion in February and March, $55 billion in April, $45 billion in May, $35 billion in June and July, and $25 billion in August and September.
With growth slowing in many European and Asian economies, nervous investors are fleeing stocks this month and piling into bonds — especially U.S. debt, including mortgage-backed securities.
The promising bottom line for borrowers: Crashing demand and lots of money to lend from sources other than the Fed have eased any pressure on interest rates. At least so far.
For full story go to www.Interest.com