A year ago, prospective home buyers were marveling at 30 year mortgage rates that had dropped as low as 5.97%. But now those seemingly once-in-a-lifetime low rates are just so last year. Because this week, in an effort to keep credit loose and keep houses moving, the those same 30 year mortgages rates have moved down to an average of approximately 4.52%. Fifteen year rates have come down as low as 4.37%.
These astoundingly low rates are not for everybody. The Los Angeles Times indicates that the lowest rates are predicated upon buyers having good credit. Today, good credit averages a minimum of 620. In addition, in order to qualify for the lowest rates, borrowers must have a down payment of at least 20%, and should expect that 0.7% in fees and discount points will have to be paid up front to the lender of their choice.
For those who want to refinance at the current low mortgage rates, a minimum of 20% equity must be held in their property. The same credit and discount fees will apply.
While the absolute lowest rates may not be for everyone, rates below 5% are currently available to most people with credit ratings of at least 620, but with far less than 20% to put down. In fact, 90% of loans that the mortgage bankers I work with are writing come through the FHA. These loans require only a 3.5% down payment.
Interest rates have decreased by 0.8% from the mortgage rate peaks in June, so buyers in the $200,000 range should expect to pay approximately $100 less on their monthly payments than people who purchased earlier in the year.
Rates on 15 year fixed mortgages have moved down to an average of 4.29%. The Wall Street Journal says that these are the lowest rates since 1991, which is the year that Freddie Mac began its tracking system. Along with these falling rates, and the extension of the home buyer tax credit, applications to purchase homes leaped by 9.6% last week, according to the Mortgage Bankers Association.
All the numerical good news in mortgages and home buyer tax extensions has existing home sales on track to reach 6.1 million units this year, according to the Case-Schiller index.
Even more encouraging news to the real estate market are Commerce Department figures showing that new home purchases increased by more than 6% in October. This translates to an annual rate of more than 430,000 units. The last time this number was seen was back in September of 2008.
Along with lower mortgage interest rates, there also remains the buyer’s incentive of continuing lower home prices. Because of the large number of foreclosures currently available in the market, along with anticipation of many more to come, prices of existing have not risen significantly. In fact, ComsumerAffairs.com reports that median sales prices across the nation fell by 0.5%. As far as overall sales numbers go, the South appears to be the leader, with more than 50% of all existing and new homes sales showing up in that region.
Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com / 561 / 213 – 6139
www.marcjablonhomes.com/
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