Interest rates on a 15-year fixed rate (used for refinance) plunged below 3% for the first time on record. The 30-year fixed rate (used for purchase) fell to 3.75%, compared to last year’s mark of 4.55%. For some more perspective on the interest rate drop, if you were to take out a $100,000 loan, you would save $47 a month and over the course of 30 years, you would save $16,756.
For those looking to refinance with a 15-year rate, you would save $37 a month compared to if last year’s 3.74%. Many of the reasons for the continuing slide of mortgage rates is the combination of the euro-zone crisis as well as a weak housing market with home prices being at their lowest since 2002. Lower mortgage always help the housing market but considering the fact that seemingly every month, mortgage rates hit record lows without any noticeable boosts to the housing market, the low rates will not vigorously boost the housing market.
It still is the best time to buy a home because of the low rates combined with rising rent prices, in many cases it is cheaper to buy a home than rent one. The main factor that will affect the housing market now is jobs and the confidence that one will keep that job. One of the main reasons why people continue to rent is because they are unsure if they’ll still have a job a year from now and don’t want to be settled with mortgage payments. A more stable job market along with the clearing of mortgage debt will be the tonic to heal the housing market.