Fixed-rate mortgages are almost as cheap as the teaser rates on adjustable-rate mortgages of a few years ago. The average rate on a 15-year fixed rate mortgage for today (November 15th, 2011) stands at 2.97%. (Note: It was at the time I wrote this post. Rates change all the time.) Rates haven't been this low in at least fifty years. Some new car financing isn't this low, and the terms on new car loans aren't anywhere near 15 years.
Why are rates going further in the basement? A few reasons:
- It's harder to find qualifying borrowers. A lot of people are living life after foreclosure and just flat-out don't qualify for a mortgage, let alone a mortgage at the best rates available.
- Banks are lending less. This is related to the search for qualifying borrowers, but from the supply side of the equation. Banks on the whole are gun-shy after the bath that they took when housing crashed.
- The economy is still below par. Unemployment is still north of 9%. It was under 5% four years ago.
Let's say that I got a 30-year fixed-rate mortgage five years ago, when the rate was about 6.25%. On a $150,000 loan, my payment would have been $923.58. After five years I'd owe almost exactly $140,000.
If I refinanced the remaining $140,000 at a 15-year fixed rate mortgage of 3% — which is the going rate! — my payment would go up only by $43 per month, and I'd shave a full ten years off of my mortgage.
I didn't think rates would get still better from this year's lows, but I was wrong. If you haven't refinanced in a while and your credit is sparkly-shiny, run some numbers and give it some serious thought. These are crazy low mortgage rates.
We just re-financed into a 15-year 3.375% mortgage with around a half a point. I just checked my lenders website and that’s still about what they’re offering. So I’m thinking that the 2.97% mortgage might have a high closing cost amount. Either way, the deals this year can’t really be beat!
One of the things that contribute to the low rates is the Fed discount rate. The other contributor is the 10 years treasyry rate. I think the rates will stay low for the next few years.
Absolutely! Run the numbers if you plan to be in your home for a while yet. You can save on your monthly payment or shave the years off your mortgage. Either way has its advantages. Check on bankrate.com to find the best rates allowed in your state. Then get on the phone & make those calls!
This is great offer! Low interest rates mean great savings too.
Wow! I didn’t know that rates got this low recently. It may be time to refinance now — that’s 1.25% below my current 15 year rate. Crazy!
It’s great that 15 year loan is below 3%. I’m currently looking into 30 year loan, hopefully about 4%. This will help me save $200 per month but the closing cost is $2500. I’m thinking about it…
That’s a great rate for 15 years. I think anyone in a variable rate mortgage should definitely consider this as well as anyone in a higher fixed rate. Even factoring in the prepayment penalty it may well be worth the switch.
This would be ideal time to take a mortgage but looks like I am still short to stabilize income for my business so I can take mortgage without risk to lose it someday.
Hopefully the rates won’t rise dramatically within next year
Wow, I refinanced a few months ago at right around 3% for a 15 years, can’t believe they’re even lower now!