With home-loan interest rates at record-low levels, home buyers searching for an affordable mortgage and homeowners seeking to refinance now have a tremendous opportunity to lock in a mortgage at a bargain price, experts say.
According to Freddie Mac’s Primary Mortgage Market Survey, benchmark 30-year fixed mortgage rates fell to a record low 4.32 percent on September 30th. Last year at this time, the 30-year fixed loans averaged 4.94 percent.
This is the lowest the national average for 30-year fixed loans has been since April of 1971 when President Richard Nixon was in the White House. Economists say rates historically have not been this low in more than a half century.
Fifteen-year fixed mortgages also dipped to a record-low average of 3.75 percent on September 30th. It is the lowest average 15-year fixed loans have been since September of 1991, when Freddie Mac began surveying this mortgage type. A year ago at this time, the 15-year fixed loans averaged 4.36 percent.
The Freddie Mac rate survey also assumes the lender is charging a loan service fee of 0.7 of 1 percentage point. However, borrowers who shop around actually can do better than these national averages.
“Fifth Third Bank currently is offering conforming 30-year-fixed rate mortgages at 4.25 percent and zero points or loan fees,” noted veteran lender Michael Klein, a retail mortgage consultant at Fifth Third Bank.
For borrowers interested in a shorter term loan, Fifth Third Bank now is quoting 3.875 percent on a 5/1 adjustable-rate mortgage (ARM), Klein said.“If you are seeking a jumbo mortgage of up to $1 million, Fifth Third Bank has two choices—a 5/1 ARM at 4 percent, and a 30-year-fixed rate mortgage at 5.3 percent,” Klein noted. “However, if you are planned to buy a home or refinance, better hurry. These record-low interest rates likely will not last.”
Earlier this year, Mortgage Bankers Association (MBA) economists predicted that 30-year fixed mortgage rates could rise to 5.4 percent by the end of 2010, and reach 6 percent in late 2011. Rates could skyrocket as high as 6.6 percent by late 2012, the MBA said.
However, with the economy continuing to sputter, the Federal Reserve now is contemplating a new round of Treasury bond purchases of up to $1 trillion, which could push long-term mortgage rates lower by year’s end.
Experts say the world of mortgageland is unpredictable and volatile. Few of today’s novice borrowers remember that 11 years ago in August of 1999, lenders were quoting 8.15 percent on a 30-year fixed mortgage.
To appreciate today’s historically low rates, housing experts say home buyers need only to look at what banks and mortgage lenders where charging in the early 1980s.
According to Freddie Mac, benchmark 30-year mortgage rates peaked at a whopping 18.45 percent in October of 1981 during the last Great Recession. Rates fell below 10 percent in April of 1986, then bounced in the 9-percent to 10-percent range during the balance of the 1980s.
Fifth Third Bank is an aggressive yet responsible entity and an institution that is focused on an ethical, responsible, low-cost and long-term banking commitment to each and every client, Klein said.
The bank funded more than $1.5-billion in residential mortgages in Chicago in 2009. As a multi-billion dollar federally chartered and FDIC-insured bank, Fifth Third will provide mortgage borrowers with a wider and more direct access to a variety of loan programs.