By Dan Green, mortgage market expert
Mortgage Rates Lowest Since May 2013
Another week, another report of sub-4% mortgage rates.
Conforming 30-year mortgage interest rates dropped 7 basis points (0.07%) last week to reach to 3.66%, on average, nationwide. The average 15-year mortgage rate also dropped 7 basis points (0.07%), falling to 2.98 percent.
Both rates — plus rates for the 5-year ARM — have hit their lowest levels since mid-2013 and show little sign of slowing down.
At today’s low rates, home purchasing power has increased, and millions of U.S. homeowners are potentially eligible for a refinance. It’s a terrific time to compare today’s mortgage rates or consider a home purchase.
30-Year Mortgage Rate Now Averages 3.66%
Each week, government-backed Freddie Mac conducts a mortgage rate survey of 125 banks nationwide. The survey asks banks reply with their “going” mortgage rate for a prime mortgage borrower, along with the number of accompanying discount points required to lock that rate.
A prime borrower, as defined by Freddie Mac, is one with ample home equity or downpayment, high credit scores, and documented income which meets or exceeds mortgage underwriting standards.
HARP mortgages from Fannie Mae and Freddie Mac are not considered “prime”, nor are VA loans or FHA loans which are backed by the Department of Veterans Affairs and the Federal Housing Administration, respectively.
Freddie Mac’s weekly survey shows the average 30-year fixed rate mortgage rate at 3.66%. In order to get Freddie Mac’s 3.66% mortgage rate, borrowers are paying 0.6 discount points, on average.
Paying 0.6 discount points will add $600 in closing costs for every $100,000 borrowed. Loans in high-cost areas, therefore, a classification which includes Loudoun County, Virginia; Potomac, Maryland; and Orange County, California, which can be made at the maximum $625,500 loan size, would carry a one-time cost of $3,753.
Locking a 15-year loan requires just 0.5 discount points.
With mortgage rates so low, there are 5 types of homeowners who should probably refinance immediately; a list which includes homeowners with mortgage rates over 4.50% and homeowners with an existing FHA home loan.