Mortgage Rates – As the New Year we have experienced many good news and the drops in the mortgage rates are one of them. According to a post published in the Washington Post mortgage rates are decreasing day by day and this year especially the following months will be a good time for the house owners to consider refinancing their current houses.
The first decline started in the December, 2015 and this trend still continues for the last three months. Most of the house owners already paid a visit to their banks to discuss the possible opportunities to save money from their current deals.
It is still a mystery whether the rates will continue to drop however we believe that this will be the right time to do what you are planning to do because a quick rise in the rates will make your morale upside down. There are also some citizens who are regretful because they went to their banks to soon right after the decrease in the rates. Which one you will be? Are you going to pay a visit to your bank soon or you will wait a bit more since you believe that the rates will fall more in the following months.
Mortgage rates are falling again
Average long-term U.S. mortgage rates fell last week as anxiety over the global economy persisted. Long-term rates resumed their decline after being unchanged the previous week following six straight weeks of easing.
Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year, fixed-rate mortgage slipped to 3.62 percent from 3.65 percent a week earlier. That puts it well below the 3.80 percent it marked a year ago.
The average rate on 15-year fixed-rate mortgages declined to 2.93 percent from 2.95 percent the previous week.
Mortgage rates have continued to fall despite the Federal Reserve’s decision in December to raise the short-term rate it controls for the first time since 2006.
Global economic worries and turbulence in world stock markets have pushed up prices of U.S. government bonds as investors seek safety. That has depressed the yields on the bonds, which mortgage rates follow. The yield on the 10-year Treasury bond has dropped to strikingly low levels below the significant 2-percent mark.
The benchmark yield stood at 1.75 percent Wednesday, down from 1.81 percent a week earlier. The yield fell further to 1.72 percent Thursday morning. That compares with 2.27 percent before the Fed’s rate increase Dec. 16.
Despite the decline in mortgage rates this year, new government data show that Americans stepped back from buying new homes in January, as purchases plunged sharply in Western states where prices are typically higher.
The Commerce Department said Wednesday that new-home sales fell 9.2 ; percent last month to a seasonally adjusted annual rate of 494,000.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fees for a 30-year mortgage rose to 0.6 point from 0.5 point last week. The fee for a 15-year loan was unchanged at 0.5 point.
Rates on the adjustable five-year mortgage averaged 2.79 percent last week, down from 2.85 percent the previous week. A year ago, the 5-year ARM averaged 2.99 ; ; percent.
With mortgage rates defying all expectations and dropping even lower since the start of the year, this could be a good time for homeowners to consider refinancing, says the Washington Post. Back in December, as the Federal Reserve stood poised to raise interest rates for the first time in years, many sensible homeowners rushed to refinance their properties, locking-in low rates before the expected hike in mortgage rates.
A hike that never came. In fact, those who waited, or just didn’t get themselves organized in time, may now be reaping the rewards, as, contrary to expectations, rates have since dropped to levels approaching their all-time low. According to Freddie Mac, the rate of the average thirty-year fixed mortgage has fallen from 4.01 to 3.62 percent since the beginning of January.
Economists have since adjusted their forecasts for 2016’s rates. Speaking to the Post, Anders Liljehom from Portland said he refinanced his home back in December, just days before the Fed raised rates. At the time, Mr Liljehom was pleased to have “outsmarted” the economy, but mortgage rates are now lower now than when Liljehom refinanced and he said it hurt to know he could have gotten a lower rate if he’d waited:
I could have saved more money if I’d waited […] My interest rate is still quite low, but it does sting a little knowing it could have been lower.
Refinancing your mortgage at a lower rate could save you a lot of money over the years, says a recent San Francisco Chronicle report on refinancing. Refinancing would allow you to divert money saved on interest payments towards other purposes – such as paying for children’s education, carrying out upgrades to increase the value of your home, our investing in more profitable ventures.
However refinancing may not be the best move for absolutely everyone: if you are in the position to pay off your mortgage entirely, this would likely be the best plan of action, as it would allow you to save a large sum of money that you would otherwise pay out in interest on the loan over time.
Although, in the SF Chronicle report, Bernie Katzmann of Vanguard Properties warned that anyone considering this latter option should make sure they have sufficient liquid assets available to cover any unexpected eventualities – such as the need for emergency medical treatment or loss of employment – before deciding to pay off their loan.