Freddie Mac: 30-Year Mortgage Rates Keep On Giving

The Newsdesk
The Mortgage Reports contributor

Mortgage Rates Drop Once Again

Shopping for a new mortgage? Today's mortgage rates are lower than a week ago.

According to Freddie Mac’s weekly survey of more than 100 mortgage lenders, conventional 30-year fixed rate mortgages dropped another 2 basis points (0.02%) last week, to hit 3.44% nationwide, on average.

It marks the 11th straight week mortgage rates have averaged below 3.5 percent.

15-year mortgage rates dropped, too, falling 1 basis point (0.01%) to reach an average of 2.76% with an accompanying 0.5 discount points paid at closing; and, 5-year ARM mortgage rates dropped 2 basis points (0.02%) to 2.81 percent.

Mortgage rates haven’t been this low, for this long, in history.

More than 8.7 million households are now potentially eligible to refinance, and first-time home buyers are now finding homeownership to be cheaper than renting in many U.S. cities.

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

Verify your new rate (Jul 7th, 2020)

Freddie Mac: Mortgage Rates Drop To 3.44%

This year’s mortgage rates have defied prediction.

Freddie Mac’s weekly mortgage rate survey shows the average 30-year fixed rate interest rate at 3.44% nationwide, which is close to 60 basis points (0.60%) below the levels from January; and below year-ago interest rates, as well.

It’s the exact opposite of what Wall Street forecast for 2016 mortgage rates.

2016 was supposed to be the year that the Federal Reserve ended its low-rate policy; and that the nation showed steady economic growth.

However, with energy costs dropping, economic uncertainty in China, and the Brexit vote from the European Union, the U.S. and world economy suddenly look a bit vulnerable. Safe-haven buying has picked up and mortgage rates have dropped.

Falling mortgage rates make homes more affordable.

However, if you’re in the process of buying a home, you’re noticing that falling mortgage rates have been offset by a rise in home valuations.

Access to cheap money is good, but homes are more expensive to buy, which raises the amount of cash required to make a down payment.

Last year, a 10% down payment on a home for $400,000 cost you $40,000. Today, that home is worth $424,000. Your 10 percent down payment now costs $42,400.

For some home buyers, the prospect of a larger down payment may put homeownership beyond their reach.

Thankfully, low- and no-downpayment mortgages remain readily available, along with zero-closing cost home loans, which make it easier to afford a new home.

Verify your new rate (Jul 7th, 2020)

Use Zero-Closing Cost Mortgages To Save Money

A zero-closing cost mortgage is a mortgage for which all closing costs are paid by the lender.

In general, a $250,000 mortgage can be converted to “zero-closing cost” by adding a quarter-percentage point increase to the interest rate.

Doing a zero-closing mortgage adds approximately $15 to a monthly payment for every $100,000 borrowed. The amount saved will depend on your closing costs, which vary by state.

Note, though, that you may be eligible for lower rates than what Freddie Mac’s survey reports. This is because the Freddie Mac survey covers conventional loans only.

Rates for other loan types, including VA, USDA, FHA, and jumbo loans are different from Freddie Mac’s survey — and they’re typically lower.

VA mortgage rates are currently one-quarter of a percentage point (0.25%) lower than a comparable loan via Fannie Mac or Freddie Mac, and rates for FHA loans beat conventional loans, too.

The typical FHA mortgage rate is now roughly 12.5 basis points (0.125%) below the conventional rate and, for homeowners with credit scores below 740, the FHA loan may be a better option low-downpayment option as compared to the Conventional 97.

FHA mortgage insurance premiums (MIP) were lowered earlier this year to help with home affordability.

How Much Will Your Mortgage Cost Each Month?

30-year mortgage rates are lower as compared to the start of the year, dropping close to 60 basis points (0.60%).

As today’s mortgage rates have dropped, monthly payments have dropped, too — lowering borrowers’ debt-to-income (DTI) ratios.

Debt-to-income is a key part of the mortgage approval process. Any drop in your DTI can make it easier to get mortgage-approved by a bank — for either a purchase loan or home loan refinance.

When mortgage rates drop, it also raises a buyer’s maximum allowable home purchase price. This is because, for the same payment, a buyer can borrow more money.

Use our 3-in-1-mortgage calculator to calculate your payment.

During the last week of last year, a $1,434 payment would cover a mortgage for $300,000. Today, that same loan costs just $1,337 per month — a reduction of seven percent.

For every one percentage point drop in mortgage rates, a buyer’s maximum home purchase price increases by approximately 11 percent.

What Are Today’s Mortgage Rates?

Today’s interest rates are rapidly approaching their best levels of all-time, but don’t wait for rates to bottom out. Take a look at today’s live mortgage rates and see what’s possible for your home and your loan.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Verify your new rate (Jul 7th, 2020)