15-year mortgage rate hits record low

Mortgage rates dropped again this week, with the 15-year fixed-rate loan hitting a record low, according to a report from mortgage financier Freddie Mac.

The 15-year fixed rate fell to 2.56% from 2.61%. A year ago, it stood at 3.07.

The most popular mortgage, the 30-year fixed rate, came in at 3.35%, a drop of 0.05 percentage point and only 0.04 percentage point above its record low set the week of November 21, 2012.

The rates provide a welcome boost to the housing market and to the overall economy.

Residential fixed investment added to overall economic growth over the past eight consecutive quarters and contributed more than 0.3 percentage points in growth over the first three months of this year, near record low mortgage rates should further drive the housing market recovery over the near term.

The news came a day after the Fed announced that it would keep buying up to $85 billion in mortgage-backed securities and Treasuries a month.

There was a chance that the Fed would start to taper their purchases as summer approached, but that is starting to look less likely, given the still-soft state of the economy. Odds favor that the programs will continue until much later in the year, so mortgage rates should continue to be available at fantastic rates.

Low rates help existing homeowners even if they don’t refinance their homes. Affordable loans boost homebuyer demand, sending home prices higher. They’ve recorded a 9% gain over the past 12 months, according to the S&P/Case-Shiller home price index.

The added home values mean some homeowners will no longer be underwater on their mortgages and can cash in the extra equity should they run into a rough financial patch. They can also sell their homes without resorting to a short sale, in which the price paid is less than what they owe on their mortgages. That saves sellers from a big hit on their credit scores.

If homeowners do refinance, they often choose 15-year, fixed loans. They are popular with borrowers seeking to shorten their loan terms — saving themselves on total interest payments. The record low rates enable them to do that without increasing their monthly payments very much.

Borrowers with three-year-old, 30-year fixed-rate loans at 5% would have a monthly payment of about $537 for every $100,000 borrowed, and would pay out a total of about $93,000 in interest over the course of the mortgage. Switching to a 15-year at 2.57% would increase the payment only to $670 a month but the total interest paid out would come to less than $21,000.

Mortgage refinance applications rose 1.8% last week, according to the Mortgage Bankers Association, and account for about 75% of all applications for mortgages.

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About thenoelteam

As a Broker with RE/MAX Alliance, I work energetically for my clients whether they are a buyer or seller. I help you achieve your goal of owning a home or getting the best price for your home in the shortest time possible. After graduating from UCLA with a degree in communications and finance, I was licensed in 1977 and since then I have sold over 3600 properties amounting to over $1 billion in sales. I currently rank in the top 10 in home sales for Colorado. I offer the same quality of service and superior communication to all clients, ranging from starter homes to multi-million dollar estates, commercial and income properties, relocations and foreclosures My goal is to provide you with the best representation possible whether you are buying or selling. Over the years, one of the things that I've discovered is that there is a difference in the way individual Realtors do business. For me, I have always felt that honesty and personal integrity are the foundations upon which a successful business and career are built and sustained. I have an extensive background and knowledge base in real estate, including financing, which has enabled me to provide outstanding, quality advice and service not found with many agents today. My commitment to communication creates a positive relationship between my client and myself that results in a successful property sale or purchase. My passion for real estate, commitment to my clients and personal integrity has helped me to achieve success placing me in the top 1% of all brokers in nationwide. In my career, I have earned a number of awards and received considerable recognition for my success but the most significant recognition comes from the fact that over 75% of my business comes from past clients. My success is a true measure of my client satisfaction.
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