Thursday, August 18, 2011

Mortgage Rates Fall to Record Low Levels: Monthly Payments on A Median Price Home Only $677



Based on data released today by Freddie Mac:

1. Rates for the 30-year fixed mortgage fell to a new all-time historic low this week of 4.15%, which is slightly below previous record low for the 30-year rate in mid-November of last year of 4.17% (see top chart above). 

2.  The average fixed rate for 15-year mortgages fell to 3.36%, the lowest rate in the history of this series, which started in 1991 (see middle chart).   

3. The rate for one-year adjustable mortgages fell to 2.86% from 2.89% last week, setting a new all-time record low going back to April 1986, when weekly data for ARMs started being collected (see bottom chart). 

MP: It's a great time to buy a house or refinance your mortgage.  For the current median price home of $174,000, with a 20% down payment, monthly payments for principal and interest would be: 

30-year 4.15% fixed rate: $676.66 per month
15-year 3.36% fixed rate: $985.57
1-year 2.86% ARM: $576.41

15 Comments:

At 8/18/2011 2:40 PM, Blogger morganovich said...

amazing what you can do with massive federal subsidies.

freddy and fannie are what, 70% of the market?

 
At 8/18/2011 2:48 PM, Blogger misterjosh said...

If only I had 20% equity...

 
At 8/18/2011 3:42 PM, Blogger Bill said...

This assumes that someone could get approved for a loan (not likely), that the appraiser would not kill the deal (also not likely) and that they have 20% to put down (definitely not likely).

 
At 8/18/2011 4:03 PM, Blogger Benjamin said...

As Milton Friedman said, once you get to zero bound, then you have to go to QE.

We are at zero bound. We are getting Japanned.

 
At 8/18/2011 5:02 PM, Blogger Mark J. Perry said...

Almost 35 million existing homes have sold so far this year, so there are millions of people who have good credit and qualify for a mortgage, have the down payment, the home passes the appraisal, etc.

 
At 8/18/2011 5:12 PM, Blogger PeakTrader said...

Sales of Existing Homes Down
August 18, 2011

Existing-home sales (in July) declined 3.5% from a month earlier to a seasonally adjusted annual rate of 4.67 million.

 
At 8/18/2011 5:16 PM, Blogger PeakTrader said...

Continued:

Dow Jones Newswires had expected home sales to rise by 4.0%. (We can only imagine their shock when the news of the decline hit.)

 
At 8/18/2011 5:54 PM, Blogger PeakTrader said...

The 30-year bond yield didn't fall off a cliff till around July 27th (from 4.3% to 3.4% today).

So, August may be a much better month for home sales and refinancing.

 
At 8/18/2011 6:59 PM, Blogger Larry G said...

what kind of investors are willing to settle for the 4% interest from those mortgages?

how many of the 35 million buyers are buying fire-sale properties at fire-sale interest rates hoping to "flip" them once the bottom is reached?

used to be that a certain number of new homes were replacement homes for existing owners who wanted better digs and could easily sell their current home for top dollar.

I don't think there are many folks doing that right now - especially the ones whose existing mortgages are under water.

 
At 8/18/2011 8:10 PM, Blogger wintercow20 said...

I have one of those median priced homes. And I am trying to refinance. Except New York State is charging me a $1400 mortgage transfer tax (even though my mortgage is 2 years old and I paid the same tax back then), and the fees on closing are over $1,000.

Oh, and my taxes on a $187k house? Try just about the same as those P&I payments you showed us.

Yay. Now if I had it in me to just relocate.

 
At 8/18/2011 9:42 PM, Blogger Hydra said...

$1400 bucks fora a stamp. Yikes.

 
At 8/18/2011 10:31 PM, Blogger morganovich said...

mark-

you are off on that sales rate by an order of magnitude.

are you summing sets of trailing 12 month numbers?

as peak said, the number is more like 4.7 million in the last 12 months, way down from the over 7 million numbers of a few years ago.

also, the % of cash buyers is WAY up. it's running around 30%, up from 12% 2 years ago.

i'd be surprised if more than 2.5 million homes had been bought with mortgages year to date.

that's 2.2% of households.

by your math, nearly a third of US homes would have sold.

 
At 8/18/2011 11:00 PM, Blogger Cabodog said...

Regardless of whether buyers can finance or not, the numbers point to a bottom for real estate. If retail buyers (owner occupied) can't qualify, they'll need to rent. And at these prices, investors will buy and supply the rentals, especially when cash is earning almost zip.

For those fearful of inflation, homes tend to, historically, perform well.

 
At 8/19/2011 8:08 AM, Blogger morganovich said...

http://cr4re.com/charts/charts.html?Existing-Home#category=Existing-Home&chart=EHSNSAJuly2011.jpg

this data (from the NAR) makes sales this year look like about 2.8mn. (i'm eyeballing that)

it also looks like thus far, 2011 has been below 2010 in 5 of 7 months through july.

given that cash purchase %'s are also up year over year, that would seem to cast some doubt on the thesis that low rates are driving more activity.

current rates are like a great drink special in the VIP room. if you can get past the velvet rope, you get killer deals, but most cannot.

downpayment and credit rating requirements are freezing out much of the market.

 
At 8/21/2011 12:44 PM, Blogger Unknown said...

It's such a great time to refi your house that everyone who could do so has already done so. Houses continuing to fall in value havent created enough equity for recent buyers to refi, and the probably have a rate too low to make it worth the cost.

The federal funds rate has been low for more than two years. That explains supply. The only reason mortgage rates are falling is because loan demand is so low. Home sales are way down, even after controling for the spike from the home buyers tax credit.

This is a sign if a weak economy, not a sign that all is well. It's also a sign of continued, unwarranted government intervention in the marketplace which is nothing for a free marketeer to be celebrating.

 

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