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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: May 2, 2013

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Mortgage loan interest rates hover above record lows this week according to interest rate reports provided by loans.org.

For the week ending May 2, 2013, the 30-year fixed-rate mortgage (FRM) averaged 3.24 percent, a significant drop from last week’s rates of 3.33 percent.

If an average borrower took out a $250,000 home loan at today’s rates instead of a year ago, that borrower would save $30,222 over the lifetime of his or her loan. At today’s mortgage interest rate of 3.24 percent, his or her monthly payment on the $250,000 home loan would be $1,086.64. After 30 years, he or she would pay a total of $391,190.40.

According to Freddie Mac, at this time last year, the 30-year FRM averaged 3.84 percent. Using this rate, if borrowers took an equivalent loan out a year ago, they would pay $1,170.59 monthly, for a total cost of $421,412.40 after 30 years. The current mortgage loan interest rate would save borrowers a significant amount of money.

In addition, loans.org reports that the 15-year fixed-rate mortgage averaged 2.48 percent. The rate is down from last week when it averaged 2.54 percent.

The 5/1 adjustable-rate mortgage (ARM) averaged 2.26 percent. This rate has remained the same for the past three weeks.

Mortgage loan interest rates reduced ever further this week after Gross Domestic Product (GDP) reports were released. The Bureau of Economic Analysis released an advance estimate of real GDP which shows growth of 2.5 percent for Q1 2013. Despite an increase, the rate fell short of economic forecasts.

According to Freddie Mac, another contributor to the weekly low rates is residential fixed investment. Over the past eight quarters, the fixed investment has been strong. From January to March 2013, it experienced more than 0.3 percent growth.

Sol Nasisi, president of BestCashCow, told loans.org that mortgage rates increased in previous months due to expectations of economic growth.

According to the Federal Reserve’s Federal Open Market Committee (FOMC) meeting data released yesterday, inflation will remain below the target rate of two percent. Despite hearsay about the Fed decreasing its Treasury purchases, the committee stated that it will continue buying $85 billion per month.

Unemployment is still above the 6.5 percent target rate needed to raise interest rates.

“Rates are low because the economy is still stuck in low gear,” Nasisi said.