Mortgage rates continue to go lower. Crazy low: 30-year fixed-rate mortgages at 3.61%, and 15-year fixed-rate mortgages at 2.83%. This places the rates squarely below 4% and 3%, respectively.
Seriously: How low can they go?
These rock-bottom mortgage rates are happening at a time of year during which sales are most brisk: springtime. Demand for mortgages doesn't seem to be driving their price up, which could indicate that lenders are still holding on tight to their money, or because there are a lot of properties that are worth less than what's owed against them.
With the rates as low as they are, any fixed-rate mortgage — even a 30-year mortgage — above 5% is a candidate for a mortgage refinance. The refinance payback time is reasonable.
The trick then becomes getting the refinance approved, and therein might be the rub. If the value of the property is less than what is owed against it, a refinance is unlikely because the lender couldn't recoup its money in the event of a mortgage default.
On the loan origination side, if the prospective borrower's credit is anything less than stellar, they may have a hard trek to getting the loan in the first place. Creditworthy people won't have issues, but the bar has been raised compared to where it was five years ago.
When to pull the trigger?
That is the six-figure question, isn't it? Borrowing money hasn't been this cheap in decades but it doesn't make sense to buy if you're not ready. Don't worry; it's okay! Home ownership has its own set of headaches compared with renting.
On the other side, the low mortgage rates make reasonably-priced homes even more affordable for creditworthy borrowers. What's more, there are more reasonably-priced homes around because of the downward price pressure from foreclosures and the like.
One thing is for sure, though: Banks won't pay people to borrow. The rates will only go so low, and they don't have much more room to go down. We've got to be getting close to the bottom. Then, it's all uphill from there.
So I recommend keeping an eye on mortgage rates if you're in the market for a new mortgage or a refinance.
15 Year mortgage rates under 3% is unbelievable! If I was able to refinance, I would. Nice article!
When to pull the trigger? Right before they go up! 🙂 Seriously, you will never hit absolute bottom or sell at the top, but you can get close.
I would have to say pull the trigger NOW! Over the past five months, rates have really gone on a roller coaster ride; they went up something like 6 consecutive weeks from March through early April. We are in the market for a new house, and have been paying close attention!
Ugh, I refinanced too soon — 2.83% ?!! Oh well, a 1% reduction in my former interest rate is still very good.
It really is crazy. I just refinanced to a 5/1 ARM at 2.625% from 3.125% just last fall.
I can’t believe it. My payment is 40% cheaper than 4 years ago.