Mortgage Interest Rates Drop Below 5 Percent
Applications for home mortgage loans soared by 13 percent last week, increasing the total percentage to 50 percent. This is a dramatic increase, since borrowers have been taking advantage of the low mortgage interest rate that is now averaged at 4.97 for the 30-year fixed home mortgage loan.
Because of the $1 trillion funds from the government, the housing industry has now been seeing signs of recovery after being hit the hardest by the economic crisis. The new average rate of 30-year fixed rate mortgage loans have been the lowest to be recorded in decades. This was based on a report by the Mortgage Bankers Association.
Freddie Mac also reported last Thursday that the average rate of 15-year fixed rate home mortgage has already dropped to 4.46 percent. This is the lowest percent to be recorded ever. Borrowers have already taken notice and have caused applications to soar last week.
There are different factors that have been contributing to this. One of these is the growing confidence on the real estate market. Also, housing prices are not very low anymore. Lastly, the government continues to extend its efforts to keep home mortgage interest rates as low as possible.
According to Stew Larsen of the Bank of the West, what is happening right now in the mortgage industry is very significant, although it is not as big as we all want it to be.
With the rush in borrowing, these low rates may be gone by early next year. According to Brad Blackwell, national sales manager of Wells Fargo Home Mortgage, this level of interest rates is a magic threshold. So in addition to people who are aiming to refinance, they are also seeing home buyers that are looking to take advantage of the new interest rates.
This is a very good sign of recovery for the whole country, and shines a light on the whole real estate industry as well. With this, homeowners are more encourages to refinance and to keep their houses away from foreclosure. In the same way, new home buyers are not too afraid and reluctant anymore. The new home mortgage interest rate gives a very positive light to everyone.
