Mortgage Rates – Do You Care?
Today’s average rate for a 30-year fixed mortgage is at the lowest level since 1971 – 4.1%. The last time long-term rates were lower was in the 1950’s. Back then, lenders didn’t give many 30 year loans. Most were 20-25 years.
But who cares?? We’ve gotten so used to having low rates that they no longer encourage buyers.
Just five years ago, the average 30 year fixed interest rate was 6.5% and in 2000, it was over 8%. In 2000, I had only been at my commission job for 8 months. When I applied for and received a mortgage, it was a 15 year at 9.5% and I was thrilled to get it. To this day, I teach that any loan with a single digit interest rate is a good loan.
Why aren’t more people running out to buy homes with these low rates?
- We take them for granted
- Lenders are expecting larger down payments and higher credit scores.
- Many homeowners have seen values drop to a place where they no longer have the equity they would need to sell.
- Younger, would-be buyers, are deciding there’s too much risk in buying so they’re renting instead.
- The Federal Reserve expects to keep short-term rates this low through mid-2013
If you’re one of the lucky ones who can, however, afford a larger monthly payment, interest rates on 15 year mortgages are as low as 3.36%. Some analysts believe this is the lowest rate ever for 15 year mortgages.
Do you care about mortgage rates?