Based on posts by Freddie Mac, mortgage rates are lower than forecasts that called for higher rates this year.
Current 15 year fixed mortgage rates are around 4.25%, their lowest since April of 1991. 30 year fixed mortgage rates have been averaging around 4.8%, still at the one of its lowest points historically. One year adjustable mortgage rates have dropped to their lowest point this year. Five year adjustable mortgage rates have also remained fairly consistent.
“Mortgage rates held at historic levels this week. In fact, rates on 15 year fixed-rate mortgages set another record low for the third week in a row,” according to Freddie Mac’s Chief Economist.
Mortgage defaults are also improving. Homeowners who were up-to-date on their mortgage payments outnumbered borrowers who were defaulting on home loans.
Some economic forecasters had expected interest rates to rise in 2010, beginning with the Federal Reserve’s completion of $1.25 trillion mortgage-backed security purchase program. However, since then mortgage rates have continued to remain low. Between the months of March and May, 30 year fixed mortgage rates have gone down a full 0.20% and 15 year fixed mortgage rates have gone down 0.14%.
Mortgage industry analysts are concerned that these rate drops may not necessarily be a good sign for our economy. Instead, they are influenced by the effects of the economic crisis in Europe and investors are pulling away from European assets in favor of the more sturdy U.S. investments.
It is worth noting that mortgage rate declines in the past have proven fleeting, with rates moving higher after potentially permanent economic solutions have been identified.
These low rates are good news for buying a home or refinancing, but it’s also worth noting that not all borrowers will have equal opportunity to lock-in these low rates. In order to actually get the lowest mortgage rates available, borrowers typically will need a credit score of at least 720 and a significant down payment for a home purchase, or sufficient home equity to refinance.
Written by R. Smith: Home Loan, Mortgage Quote
