30-Year Mortgage Rates Average 3.98%; 15-Year Rates At 3.13%

October 31, 2014 - 3 min read

Today’s Mortgage Rates Surprise Wall Street

Current 30-year mortgage rates remain below 4% as the calendar flips to November. Wall Street analysts are shocked at the development and Main Street borrowers are reaping big rewards.

weren’t supposed to fall this far, remember. Beginning in January of this year, the Fed began a wind-down of its third round of quantitative easing (QE3), a program meant to pull U.S rates higher.

Yet, since the Fed’s withdrawal commenced, mortgage rates have done nothing but drop. The average is down by more than one-half percentage point since the New Year; with lenders now quoting rates and APR in the 3s.

VA and FHA mortgage rates are even lower.

Buyers and refinancing households now have a second chance to lock-in low, long-term mortgage rates for their homes. Keep reading for more on the recent rate drop, or skip directly to today’s rates.

30-Year Mortgage Rates Now Average 3.98%

Today’s mortgage rates defy expert predictions.

According to Freddie Mac’s weekly Primary Mortgage Market Survey (PMMS), the 30-year fixed-rate mortgage for prime borrowers now averages 3.98% nationwide, marking the third consecutive week for which mortgage rates averaged less than four percent.

Low rates have been a boon to U.S. consumers.

If you could afford a $300,000 mortgage last August, all things equal, you can afford a mortgage for $320,000 today — an increase of seven percent. Low mortgage rates have boosted home affordability, and opened refinance opportunities for homeowners nationwide.

The typical refinancing household now saves 30% off their mortgage annually.

15-year mortgage rates are similarly low. The 15-year mortgage rate now averages 3.13%.

It’s an excellent time to comparison shop your loan.

Lenders have become aggressive with their rates and loose with their guidelines. According to a Federal Reserve survey, more banks loosened lending standards last quarter than during any period this decade.

Click to get today's rates

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The Fed Can’t Make Mortgage Rates Rise

Falling mortgage rates have come as a surprise to market watchers, many of whom expected 2014 to rise.

The main reason mortgage rates were expected to climb was the Federal Reserve’s wind-down of its rate-suppressing program known as QE3.

QE3, which has since ended, was the Fed’s third round of quantitative easing, a program by which the Federal Reserve purchased mortgage-backed securities (MBS) on the open market. QE3 created a surge of demand for mortgage-backed bonds which caused bond prices to rise which, in turn, caused mortgage rates to sink.

QE3 launched in September 2012 and immediately led to the lowest mortgage rates in history, as recorded by Freddie Mac.

Because the launch of QE3 led mortgage rates down, the end of QE3 was expected to return mortgage rates to “normal”.

Strangely, that never happened.

As the Federal Reserve gradually wound down its stimulus program, mortgage rates remained low. Today, the average conventional 30-year fixed rate mortgage rate is just slightly higher than it was two years ago.

There are several reasons why.

One reason is that mortgage origination volume is lower in 2014, and there are fewer mortgage bonds to purchase. Therefore, the Federal Reserve’s purchases as a percentage of all new MBS issuance remained relatively high even as the QE3 program tapered to zero.

A second reason is that foreign investors are buying MBS as quickly as they can be sold. There’s been evidence of global economic weakness and mortgage-backed securities have provided a “safe haven” for investors looking to shield against risk.

The result is lower mortgage rates for U.S. consumers.

Lock A Low Mortgage Rate Today

It’s an ideal time to lock a purchase or refinance mortgage rate. Eventually, mortgage rates are expected to rise. Today, though, they’re near their lowest levels in 17 months, and not far from their lowest levels of all-time.

Compare today’s 30-year mortgage rates and lock in something great. Low mortgage interest rates make for low home mortgage payments. Free mortgage rate quotes are available online with no social security number required to get started, and no obligation to proceed.

Time to make a move? Let us find the right mortgage for you

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Dan Green
Authored By: Dan Green
The Mortgage Reports contributor
Dan Green is an expert on topics of money and mortgage. With over 15 years writing for a consumer audience on personal finance topics, Dan has been featured in The Washington Post, MarketWatch, Bloomberg, and others.