If you haven’t seen the news headlines this week, mortgage interest rates have hit a new all time low! A few years ago there was a frenzy to refinance and buy up homes when rates were in the 6% range. During the height of the most recent housing boom many investors bought wildly regardless of rate as they expected to turn properties around quickly and found themselves stuck with home loans at 7% to over 12%. Today 30 year fixed mortgage rates are available at just 4-4.125%. Some lenders are going even as low as 3.75% for those who are interested in paying points to lock in a lower rate. Interest rates on 15 year fixed rate loans are averaging 3.68% and adjustable loans are offering rates in the high 2% range.
There are a number of benefits of the current record low mortgage rates. Combined with today’s rock bottom house prices it means that homes are more affordable than ever before. You can now get into a $250,000 home for less than $1,200 per month with a fixed rate loan. Those not planning to keep their properties more than 5 years can enjoy payments of less than $700 a month on an adjustable rate loan. Plus you must keep in mind that what you could easily find you are getting twice the house than you could 5 years ago. $224,000 in Las Vegas, Nevada could get you a 4 year old, 4 bedroom, 2,572 sq ft home. While in south west Florida $234,000 could get you a pristine 3 bedroom pool home on a golf course.
Financial analysts at Credit Suisse see low mortgage rates boosting the demand for mortgage backed securities. This is definitely a good thing. It helps banks to move the loans it is making and stay liquid so that they can continue to make loans. If this continues it will help to fuel easier lending and give banks the confidence they need to keep making loans which in turn will continue to help the housing market recover.
If you are in the process of purchasing or refinancing a home now is definitely a great time to lock your loan. Make sure to get written confirmation that your loan is locked. If you have been sitting on the fence and have not yet made an offer on a property now is the perfect time to buy. The current great combination of low interest rates and low home prices isn’t going to last forever. The housing market has definitely bottomed out and while recovery may be slow buying now is smart. Consider the consequences in waiting. Holding off for a few more months could easily mean the same properties that you are looking at now going for $10,000 more and costing far more in the long run if interest rates rise.