A new survey recently released by Freddie Mac, the nation’s second-largest mortgage finance company, shows 30-year mortgage rates have plummeted to new, all-time lows. “With mortgage rates falling to historic lows, refinance activity has been strong over the past three months,” said Freddie Mac Vice President and Chief Economist, Frank Nothaft.
There’s no question these more-than-friendly mortgage rates have “up’d the ante” as far as home refinancing loans are concerned. The survey, which started back in 1971, shows the average rates for 30-year, fixed-rate mortgages (the most common loan utilized) were 4.57% for the week ending July 8th, a drop from the week prior, 4.58%, and 5.20% last year.
Despite the extra low rates, which have certainly saved and helped the housing market flourish again, abnormally high unemployment rates and the consistent flow of foreclosures, have taken the market two steps back.
“Even with historically low interest rates and the affordability factor for housing at all time highs there seems to still be an air of caution for many would be buyers,” said David Adamo, CEO of Luxury Mortgage based in Connecticut. He also noted many first time homebuyers are, in the face of low mortgage rates, still hesitant when it comes to buying a home. “In addition, many homeowners have been discouraged from refinancing, particularly for jumbo loans.”
Generally, home loan refinancing not only helps the country’s economy (as it gives cash to the consumers which then, goes right back towards our economy) but in doing so, also helps homeowners avoid foreclosure. Additionally, the report shows the 15-year fixed-rate mortgage averaged 4.07%, which was a jump from 4.04 percent only the week prior.
The rate on the 5/1 adjustable-rate mortgages (set at a five-year, fixed rate and adjustable each following year) was 3.75%, down from 3.79% a little over a week ago—and consequently the lowest Freddie Mac has encountered since it began to follow ARMs five years ago. Applications for home refinancing loans soared recently according to the Mortgage Bankers Association (MBA).