Currently Fixed Mortgage Rates are at the lowest

Since the month of June this year, the percentage of fixed rates on mortgage has touched an all time low currently.

In 2012, the percentage on fixed rate was 3.39% but the rate in June was sitting at 3.93%. If you had a house loan mortgage for 30 years the rate had earlier dropped at an average of 0.03. This was based on the research undertaken by Freddie Mac recently. Earlier the percentage was 4.13% but now for a 30 year housing loan the trend is 4.1%.

3.20% was the average for a 15 year housing loan which a week ahead was 3.24%. The same percentage was 2.7% in 2012. This year in August the percentage received a good hike of 3.6%.

The Federal Reserve has continued to follow the policy of buying bonds. This is considered one of the major reasons behind decline in home loan rates. It is also investing $85 million on bonds. This would make long term interest rates affordable. These are all efforts to improve the status of the current economy.

Frank E. Nothaft Vice President and Economist stated that with Federal Reserve buying bonds on a monthly basis, the situation of the economy has improved and there has been more growth in job prospects. But all these policies have not witnessed any impetus in the home loan application percentage in the recent month. This factor has lead to change in Federal policy in relation to low interest rates.

When the federal government had an overall shutdown, the rates dipped in the preceding two weeks. From last May onwards there has been a minimum increase in the percentage of fixed mortgage loan. Both type of housing loans (the 30 year and 15 year scheme) is currently witnessing its all time low, since last week of June 13.

The basic average rate for mixed adjustable home loan rates fell from 3% to current 2.96% in week after week. This showed mixed reactions. The average on this mixed adjustable home loan rates moved from basic 2.6% to 2.64%.

One positive element that needs to be discussed is that there was an increase in the percentage of home loan application recently. But when the government shut down the process slowed down to a large extent. This factor later on could have lead to an increase in percentage of housing loan application.

The rates for short term loans should be the same as forecasted. Bankrate.com in its popular Mortgage Rate Trend Index has showcased the facts that 70% of their financial analyst believe that the rate would remain the same while the other 20% forecast that the interest would witness a downward trend.

Jim Sahnger Mortgage planner for FBC was of the opinion that he did not expect to see any changes in rates. He observed that Federal Reserve mentioned that the rates were dependant on data like most traders. But there were no change in data to indicate a change in rate rise.

For long term home loan rates, the stimulus program of buying the bonds would indicate a rise in the interest rate from January onwards. It has been estimate that in Q1 the percentage in rate would be 4.6% and in Q3 the percentage would go up till 5%. Thus the New Year should bring in good news.

Coelogic’s chief economist is of the opinion that mortgage financing is not very sustainable with a 3.5% to 4% growth. The housing rates have been decreased with subsidy but once the subsidy is removed the housing rates would rise. The current rates are not acceptable according to him.

Kevin Hartmann