30-Year Mortgages Officially Under 5%
As the Fed has cut interest rates to effectively 0% and pumped Billions into the financial system the result has been a consistent decline in mortgage interest rates. Now for the first time ever benchmark rates for a 30-year mortgage are under 5%.
Is this the time to buy?
From MarketWatch:
The benchmark 30-year mortgage fell below 5% for the first time ever in Freddie Mac’s weekly rate survey as economic weakness continued to push interest rates lower, the mortgage agency said Thursday.
The national average rate on the 30-year loan fell to 4.96% in the week ending Jan. 15, down from 5.01% a week ago. That is the lowest on record. Freddie Mac began its rate survey in 1971. A year ago the loan averaged 5.69%.
Adjustable-rate loans also fell. The 5-year, Treasury-indexed hybrid mortgage averaged 5.25%, down from 5.49%. A year ago the loan stood at 5.40% and has not been this low since September 2005. The 1-year, Treasury-indexed ARM averaged 4.89%, down from 4.95%. A year ago that loan was at 5.26%.
The 15-year fixed-rate mortgage, a popular refinancing choice, edged up to 4.65% from 4.62% a week ago. Last year at this time the loan averaged 5.21%. Refinancing activity has been strong as mortgage rates have plumbed historic lows.
The drop from 5.69% to the current 4.96% is substantial but I think there is lower numbers yet to be realized. Feds will keep the interest rates down for some time to help spur the market and encourage more lending.
And even with historic rates the fact of the matter remains that until a plan can be drawn up to deal with the rising number of foreclosures no immediate housing turnaround can be seen. There is way too much excess inventory and people still feel they should hold out before taking the risk of buying a new house (like myself).
The good news though is that those with adjustable rate mortgages (ARMs) will find that when their rates re-adjust they are in the same position if not better than previous for their overall payments. This obviously is a step in the right direction but the problem is that most owners who took the teaser rate in the first place cannot afford the house regardless. And thus the dilemma continues.
Source:
30-Year Mortgage Under 5 Percent
Steve Kerch
MarketWatch, January 15th, 2009
Some more tips would be great as real estate loans do change often. Plus more experiences are appreciated.