Weaker than expected economic reports caused a slump in mortgage rates this week, according to the latest data released Thursday by Freddie Mac.
The 30-year fixed-rate average dropped to 3.59 percent with an average 0.7 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.66 percent a week ago and 4.32 percent a year ago. Since December, the 30-year fixed rate has fallen 28 basis points to start the new year.
The 30-year fixed rate, the most popular type of mortgage, hasn’t been this favorable since May 23, 2013 when it was also 3.59 percent. The 15-year fixed-rate average fell to 2.92 percent with an average 0.6 point. It was 2.98 percent a week ago and 3.4 percent a year ago. It was the fourth week in a row the 15-year fixed rate has remained below 3 percent.
Many economists believe that the Federal Reserve is seeking to raise federal funds rates this year which will result in an increase in mortgage rates.
How much are we talking here? Just to give you an example, even a one point increase in the interest rate from 3.60 percent to 4.60 percent on a 30 year $200,000 loan equals an increase of $116 per monthly payment. That’s almost $1,400 per year. I’m sure you could find better things to do with the extra money in your pocket.
If you are thinking of buying this year, don’t wait another minute, call me today.