Mortgage Rates Reach 20-Month Low

With 2015 underway, we’ve recently seen several indicators of a strengthening economy; a decline in unemployment benefit requests, improvements in wages nationwide and an increase in consumer confidence, but the good news just starts here. In fact, the average rate on a fixed 30-year loan hit its lowest point in over 20-months – a welcomed change for homebuyers and an indicator of strong start to the New Year.

According to the recent report from Freddie Mac, the average rate on a 30-year conventional loan has dropped to an astonishing 3.66%, a record low for the past 20 months and far below historic levels.

The average rate on a 15-year fixed loan also dropped, reaching as low as 2.98%, and starting rates on adjustable mortgages were slightly lower as well.

While rejoiced buy US homebuyers and sellers, the recent drop is highly attributed to economic troubles across Europe and Asia. It’s expected that the European Central Bank will launch a bond-buying program later this month, a program which is in many ways similar to that which the Federal Reserve began amidst the Great Recession.

With even the strongest economies slowing down, frightened investors worldwide are turning to safer government bonds. The move comes as annual interest rates on 10-year securities issued by Japanese and German governments fall below 1%, with U.S. Treasury noted close behind at 2% last week.

The upside to this is that the yield on securities issues by Fannie Mae and Freddie Mac often follow the trends set by the U.S. Treasury. Bond investors are accepting the lower yields on these securities, allowing mortgage bankers to lower the rates charges to consumers.

“As has been the case, global uncertainty continues to be the friend of the American homebuyer and homeowner,” said Keith Gumbinger, vice president of, a research firm that also tracks mortgage rates.

Do you think these low rates will be enough to draw in new homebuyers? What are your thoughts?