Make us your home page
Instagram

Mortgage rates fall again, begging question of how low can they go?

WASHINGTON — With mortgage interest rates setting record lows almost every week for more than two months, two questions naturally come to mind: How low can they go? And should I refinance — again?

This week rates fell to levels that many people in the mortgage business thought they would never see. Freddie Mac reported on Thursday that the average rate on a 30-year fixed-rate loan was 4.44 percent, with 0.7 of a point in prepaid interest (one point equals 1 percent of the loan amount). Loans fixed for 15 years also hit a record low, 3.92 percent, with 0.6 of a point, on average.

Frank Nothaft, Freddie Mac's chief economist, said in a report issued this week: "The ability to lock in a principal and interest payment at below 5 percent for 30 years is rare enough. The fact that a 30-year fixed-rate mortgage can be obtained for 4.5 percent, or a 15-year mortgage for 4 percent is an amazing opportunity for borrowers."

However, Greg McBride, senior financial analyst for Bankrate.com, said: "The pool of refi candidates has been dwindling because we have been below 5 1/2 percent for the past year. People may not want to invest the time and money in another go-round."

He added that, in markets where values are still declining, an appraisal that was high enough to support a refinance just eight months ago may not be at the same value now.

But, homeowners should not assume they wouldn't qualify for a new loan, said Malcolm Hollensteiner, mid-Atlantic regional manager for PNC Mortgage. "There's a large percentage of the population that doesn't feel they are eligible to refinance, but they are," he said.

Refinancings now constitute most of the mortgage market, accounting for 78 percent of all loan applications nationwide, the Mortgage Bankers Association reported this week. And many refinancers are taking the opportunity to move into shorter-term loans that carry a lower interest rate and build equity faster. That's a particularly attractive option for people who hope to pay off their mortgage before retirement.

Economists at Freddie Mac reported this week that during the second quarter, 30 percent of borrowers who were refinancing out of 30-year fixed-rate loans chose new fixed-rate loans of 15 or 20 years. That's the highest level of term-shortening the company has seen in six years.

Unless you had a high rate to begin with (6.5 percent or more), switching to a shorter-term loan boosts the monthly payment but can save a lot of money over the duration of the loan.

Might rates go even lower? Perhaps, but probably not by much, said Celia Chen, senior director at Moody's Analytics. "I don't think they're going to fall much further; they're at a record right now," she said. "And even at this low rate, it doesn't seem to be doing much to support the housing market."

Mortgage rates fall again, begging question of how low can they go? 08/13/10 [Last modified: Friday, August 13, 2010 9:30pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Washington Post.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Regulator blasts Wells Fargo for deceptive auto insurance program

    Banking

    Wells Fargo engaged in unfair and deceptive practices, failed to properly manage risks and hasn't set aside enough money to pay back the customers it harmed, according to a confidential report by federal regulators.

    Wells Fargo engaged in unfair and deceptive practices, failed to properly manage risks and hasn't set aside enough money to pay back the customers it harmed, according to a confidential report by federal regulators.
[Photo by Spencer Platt/Getty Images, 2017]
  2. McDonald's soft serve in Florida is made with handshakes and happy cows

    Consumer

    Floridians licked nine million McDonald's vanilla cones last year.

    Calves play with a rubber toy at the Milking R Dairy in Okeechobee, FL. Owners Sutton Rucks, Jr., and his wife Kris Rucks sell their milk to SouthEast Dairies cooperative, Edward Coryn of Dairy Mix in St. Petersburg buys it, transforms it into soft-serve ice cream base, and sells it to all the McDonald's. SCOTT KEELER   |   Times

  3. Hurricane Irma thrashed Tampa Bay homes sales in September

    Real Estate

    Hurricane Irma not only downed thousands of trees throughout the Tampa Bay area: It also sent home sales plunging in September.

    This home on Tampa's Davis Islands home sold in September for $5.2 million, making it the priciest sale of the month in the Tampa Bay area.
[Courtesy of Judson Brady Photography]
  4. Florida unemployment rate drops despite huge loss of jobs

    Economic Development

    Florida lost a whopping 127,400 jobs last month as Hurricane Irma swept through, according to state figures released Friday.

    Florida's unemployment rate dropped from 4 percent in August to 3.8 percent in September. Pictured is 
Shantia Blackmon (left),from St. Petersburg, talking with Jocelyn Kelley from North Carolina at a Pinellas Schools County Job Fair in June. | [DIRK SHADD   |   Times]
  5. Hooper: Jean Chatzky chats about the intersection of wealth, health

    Personal Finance

    Public safety officials can readily identify a city's most dangerous intersections.

    Personal finance adviser Jean Chatzky is one of several high profile speakers on the slate for the Women's Conference of Florida in Tampa next week. [Handout photo]