Mortgage Rates Remain Low

[May 1, 2009.]

 

Homeowners who have yet to refinance caught a break as mortgage rates fell slightly last week.

The average rate on 30-year fixed-rate mortgages slid to 4.78% from 4.8% last week, tying the record low, mortgage company Freddie Mac said. Last year at this time, the average rate on a 30-year mortgage was 6.06%.

These rates do not include add-on fees known as points. The nationwide fee averaged 0.7 of a point last week. Points represent a percentage of the loan amount being borrowed. For example, 1.0 point on a

"Mortgage rates for 30-year fixed rate mortgages, the most popular loan among homebuyers and families seeking to refinance, are more than 1.6 percentage points below the recent peak set at the end of October 2008" said Frank Nothaft, Freddie Mac's Vice President and Chief Economist.

"For a $200,000 loan, this means a monthly savings of almost $212 in mortgage payments or over $2,500 per year. In aggregate, borrowers who refinanced during the first quarter reduced their mortgage payments by about $2.5 billion over the coming year" Nothaft explained.

This is great news for those looking to save additional money by reducing their monthly mortgage payment or for those who either need to buy or sell real estate.

Some experts believe that we are nearing the end of the real estate crisis and are very close to seeing some recovery.

According to Frank Nothaft, "the housing market may be edging towards a bottom. Existing home sales stayed near its four-month average in March while new home sales were stronger than the market consensus. More importantly, the inventory of unsold new homes fell to the lowest number since January 2002. And, the S&P/Case-Shiller® 20-city composite index did not show a record year-over-year decline in February for the first time since December 2006. Finally, housing affordability hit record highs in the first quarter of this year, according to figures from the National Association of Realtors, which date back to January 1971."

 

About Author:

Chris Rocks is the Regional Director of the National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges.