In the 40-year history of Freddie Mac’s Primary Mortgage Market Survey, interest rates on a 30-year fixed-rate loan is the lowest it has ever been. Just in time for the holidays, the mortgage rate on a 30-year mortgage is now 3.94%. Mortgage rates have been falling over the entire year, and since the beginning of the year, the rate has fallen .9%. Frank Nothaft, Freddie’s chief economist notes the decrease in rates over the year results in a savings of $1,200 a year for a homeowner with a $200,000 mortgage.
These low rates are resulting in an increase in home sales, which is a good sign for the economy. This past month saw the greatest new home sales since January. Senior financial analyst at Bankrate.com, Greg McBride, contends that mortgage rates should remain low for much of 2012. “For well-qualified buyers, interest rates should be no impediment to home buying in 2012,” said McBride.
Existing homeowners are taking advantage of these historic rates by refinancing their old loans into more affordable ones. Nearly 80% of all mortgage applications last week came from existing homeowners. McBride expects that lenders will ease up on borrowing requirements only slightly. Some lenders are starting to require only a 720 credit score, where previously a 740 credit score was required for the best mortgage rates. These baby steps will, however, help more people gain access to these historic rates.
Les Christie, Mortgage rates hit another record low, https://money.cnn.com/2011/12/22/real_estate/mortgage_rates/index.htm?iid=HP_LN (accessed 12/22/2011)