Good News For Buyers As Mortgages Rates Decline Again
(The real estate market has been producing bad news for both buyers and sellers over the past year as prices and loan mortgages have been too high for transactions to be processed.)
As sales have been nose-diving the past few months, home prices have finally begun to dip as well. And now there is even more good news for home buyers. After July saw mortgage interest rates cap out at 6.8 percent after 17 consecutive increases, rates are down to a six-month low of 6.31 percent.
An article, "30-year loan mortgages decline," formulated by the associated press and published in the September 29, 2006 edition of The San Diego Union-Tribune provides statistical data that prospective home buyers and mortgage originators have been waiting for.
"Rates on 30-year mortgages dipped this week to the lowest level in more than six months. Thirty-year, fixed-rate mortgages fell to 6.31 percent this week from 6.40 percent last week, Freddie Mac reported in its national survey."
"The latest drop puts the 30-year mortgage at the lowest level since it stood at 6.24 percent in early March. A year ago, 30-year mortgages averaged 5.91 percent."
After watching interest rates and home prices rise, it must be a relief for home buyers and mortgage originators to read these figures.
Mortgage originators welcome the rate drop because they know that more originations and funding will result from the lowered interest rates. And, in fact, interest rates dropped on all mortgage options.
"Rates on 15-year, fixed-rate mortgages fell to 5.98 percent from 6.06 percent. For one-year adjustable-rate mortgages, rates dipped to 5.47 percent from 5.54 percent. Rates on five-year adjustable-rate mortgages fell to 6.00 percent from 6.08 percent."
It is important to note however, that these rates do not include additional point fees. A point is the fee that is charged directly by the broker or lender and is required to be paid upfront, usually at closing. One point is equivalent to one percent of the entire amount of the loan. For example, one point on a $500,000 loan would equate to an additional $5,000 fee.
"Thirty-year and 15-year fixed-rate mortgages both carried a nationwide average fee of 0.4 point while one-year ARMs carried a fee of 0.6 point, and five-year ARMs carried a fee of 0.5 point."
The fact that the most popular mortgage loan (30-year mortgage) experienced the biggest rate decline, will give the real estate industry a much needed boost. Desperate sellers will also be able to sell with a little more frequency.