A few times in the last several months, rates on 30-year conventional fixed mortgages have flirted with the sub-5 per cent level. Finally, after a few brief drops below this historic level, and subsequent bounces, rates seem content to hold the line at amazingly low rates.
Several economic factors and government maneuvers have combined to help make mortgage rates cheaper than ever. The fed has held the base funds rate at zero per cent. The Obama Administration has worked hard to incorporate the mortgage sector in its various bailout projects. With record low real estate prices and record low mortgage rates, there have never been greater discounts on homes in the US.
According to bankrate.com, the national average for 30-year fixed mortgages was 5.10% in early April. This is .16% higher than it was one week ago when rates averaged 4.91 per cent. Although the national average is currently above 5 per cent, there are many banks in parts of the country still offering rates in the 4.75-4.875 per cent range with one discount point. Some have touched as low as 4.625% in recent weeks.
There have been some indications in recent homes data that suggests the low rates might be starting to turn the tide in the housing market. Though there is still a huge surplus of homes on the market, buying activity has picked up a bit. The February existing home sales report, delivered late March, showed a significant rise in sales. Many markets have also boasted of much higher home sales during March as well.
For those that can afford to pay off their mortgages in 15 months, the national average mortgage rate is 4.71 per cent. Some people who have never considered this option are considering taking on this more aggressive payoff plan given the interest savings opportunity.
Along with inspiring home buying, the continued low mortgage rates have kept the lines steady for refinancing. Not only have homeowners looked for opportunities to get in on cheaper mortgage payments, businesses have shopped around as well. Several struggling retailers are trying to find creditors willing to renegotiate their existing loans and credit lines. Blockbuster shook things up Monday with its SEC filing indicating that there were no guarantees it was going to get a May 6th $250 million revolving loan. An independent auditor suggested the company may have a hard time continuing operations if it can’t shore up its financing.
The challenge many retailers have is that while rates are low, it is tough for them to persuade lenders that they are going to stay in business long enough to repay their debts. Thus, some companies are left to stare at cheap sticker prices with little ability to take advantage of them.
