15- and 30-Year Mortgage Rates Break Records
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UPDATED: May 31, 2012
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Both the 15- and 30-year fixed interest rates on mortgage loans broke historic records on Thursday according to Freddie Mac.
The 15-year fixed average dropped below the 3 percent threshold, as it plummeted to 2.97 percent. This is a 0.7 percent change from last week, when it averaged at 3.04 percent, and signals that three of the four benchmark mortgage loan interest rates are now below 3 percent.
The four benchmark mortgage loans are the 15-year fixed-rate, 30-year fixed-rate, 5-year adjustable-rate, and the 1-year adjustable-rate.
The 30-year fixed average dipped to an astounding 3.75 percent, setting a record low for the fifth consecutive week. While this is the only benchmark mortgage loan sitting above 3 percent, it is providing potential homebuyers with an opportunity to borrow money for an extended period of time at a price never seen before.
As a point of reference, the 30-year fixed interest rate was at 4.55 percent this time last year.
“Compared to a year ago, rates on 30-year fixed mortgage rates are almost 0.9 percentage points lower which translates to nearly $1,200 less in annual payments on a $200,000 loan,” explained Frank Nothaft, Freddie Mac’s vice president and chief economist, in a release.
A decade ago, in the year 2002, the 30-year mortgage rate sat at 6.89 percent.
Consider again that $200,000 mortgage loan Nothaft described. If the total cost for that mortgage loan at 3.75 percent is compared with the total cost at 6.89 percent, a lifetime difference of over $140,000 would be seen.
Couple that massive savings amount with the fact that housing prices have dropped 33.8 percent from the boom-time years of the mid-2000’s, and we begin to see the necessary signals announcing that the perfect time to finance a mortgage loan is now here.