Though many experts once predicted mortgage rates around 5% at the beginning of 2015, these forecasts have once again been defied this month. Thanks to concerns over slowing foreign economies, among other economic factors, mortgage rates have continued to drop – an encouraging change for buyers and the newest indication that business will continue to blossom in 2015.
According to the latest report from Freddie Mac, the average fixed rate on a 30-year loan dropped to 3.58% in the first week of February, marking the first time since May 23, 2013 that the average rate for a 30-year fixed loan reached below 3.6%.
Similarly, the fixed rate on a 15-year loan dropped to 2.92% – down from 2.98% the week before. Likewise, the starting rate on a hybrid loan – those that become adjustable after five years – dropped the same week.
While mortgage rates have reached their lowest point in over 20 months, it should be noted that these rates are far below their historic levels. In February of 1982, for example, rates were as high as 17.6% for a 30-year fixed loan, according to Freddie Mac. In February 2007 – the beginning of the subprime mortgage meltdown – the average rate on a 30-year fixed loan was at 6.29%
According to Len Keifer, Freddie Mac’s Chief Economist, buyers or those trying to refinance their home need not worry about rates rapidly increasing, as recent economic reports have indicated the economy is still not strong enough to trigger inflation.
“Pending home sales were weaker than expected,” he said. “Moreover, real [economic] growth for the fourth quarter was 2.6% and the Institute for Supply Management reported slower growth in manufacturing last month, both missing market consensus forecasts.”
Have you seen an increase in business due to these record low interest rates? How long do you predict these lows will last? We’d love to hear your thoughts!