Mortgage rates are way down but anger at foreclosures is sky high. Protesters… (Manuel Balce Ceneta / Associated…)
Stop me if you’ve heard this before, but mortgage rates are again at record lows, with lenders offering 30-year loans at an average of 3.84%, Freddie Mac’s weekly survey shows.
That's down from 3.88% last week and a previous record low of 3.87% in February. All of the rates would have seemed unimaginable as recently as 2008, when the 30-year rate averaged more than 6%, or 2009, when the typical rate exceeded 5%.
The 15-year fixed mortgage also dropped to a new record, according to Freddie Mac, the big government-supported loan buyer. The latest survey, released Thursday, showed the typical lender offering rate was 3.07% this week, down from 3.12% last week and its previous low point of 3.11%, set April 12.
The one-year adjustable loan also set a new record, with a starting rate of 2.7%, although of course the cost of those loans can ratchet higher whenever rates rise again.
Interest rates are at rock bottom because of the state of the economy and the inflation outlook, said Freddie Mac economist Frank Nothaft.
Economic growth appeared to be slowing early this week, when the survey was taken, creating stronger demand for the guaranteed returns offered on the mortgage bonds that Freddie Mac and its sister Fannie Mae create.
What’s more, Nothaft said, there was little fear than inflation would start eating into returns on fixed-income securities any time soon and thus little chance the Fed would reverse its efforts to stimulate the economy by keeping rates low.
The widely watched Freddie Mac survey, which has tracked 30-year rates for more than 40 years, presumes the borrowers have solid credit and 20% down payments or equity in their homes. It asks lenders what rates they are offering on loans of up to $417,000 to these borrowers assuming they pay less than 1% of the loan amount upfront in lender fees and points.
In Thursday's survey, the borrowers would have paid an average 0.8% of the loan balance to the lender on the 30-year fixed mortgage, and 0.7% for the 15-year fixed loan.
Borrowers with good credit who shop around frequently obtain slightly better rates than those in the survey. They also can obtain lower rates by paying additional discount points to their lender upfront.
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