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?

  1. We take them for granted
  2. <liWe’re dealing with a ridiculously high unemployment rate. Many simply can’t buy now because they have other priorities.

  3. Lenders are expecting larger down payments and higher credit scores.
  4. Many homeowners have seen values drop to a place where they no longer have the equity they would need to sell.
  5. Younger, would-be buyers, are deciding there’s too much risk in buying so they’re renting instead.
  6. 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?

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