Just when I was beginning to think interest rates were finally bottoming out, rates on 30-year fixed mortgages dropped again to an all-time low of 3.4 percent last week. According to a press release issued by Freddie Mac last Thursday, "all mortgage products, except the 5-year ARM, averaged new all-time record lows."
Here's a brief breakdown of the rates per Freddie Mac's Primary Mortgage Market Survey:
- 1-yr. ARM: 2.60%
- 5-yr. ARM: 2.71%
- 15-yr. Fixed: 2.73%
- 30-yr. Fixed: 3.40%
The crazy thing is that back in 2008 I was earning higher interest rates than each of these in my online savings accounts! My, how things have changed. So what's continuing to drive mortgage rates South? Frank Nothaft, chief economist at Freddie Mac, had the following to say: "Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve's purchases of mortgage securities, and should support an already improving housing market. For instance, the S&P/Case-Shiller® 20-city home price index rose 1.2 percent over the 12 months ending in July, reflecting the largest annual increase since August 2010. Moreover, 16 of the cities saw positive growth, led by Phoenix's 16.6 percent gain. Additionally, new home sales in July and August had the strongest two-month pace since March and April 2010." So, if you've been sitting on the fence saving your cash and waiting for a time to not only snatch up a home at a low price, but also lock in a super-low rate on a fixed mortgage, you might want to think about finally jumping in the game. Who knows what will happen next month in this crazy economy, but it really is looking like a great time to be a home buyer at the moment. That is, if you have excellent credit scores, plenty of cash for a down payment, and a plan to be in it for the long run. Getting approved for a mortgage is still an extremely difficult task to accomplish these days, so make sure you enter the application process with your credit scores in tip-top shape and your financial house completely in order.