Nope, 3.87% is not a typo, you read it right. Last week the 30-year fixed mortgage rate fell to a new low average of 3.87%, while the 15-year fixed hit 3.14%. According to CNNMoney, this marks the lowest rates have been in 40 years of the Freddie Mac Primary Mortgage Market Survey.
This news came on the heels of the President's plans to help make refinancing available to more homeowners. The time has never been better to purchase a new home. Just one year ago the 30-year rate was averaging slightly under 5%. At this rate on a $250,000 refinance or purchase loan, the average borrower would save over $1600 a year compared to today's rates. On the same loan amount, the 7% rates of just a few years back would have cost borrowers over $6000 per year more than what the same loan amount would cost today.
Could rates go lower? Maybe. But keep in mind that mortgage rates are determined by several economic (and federal) factors. What this means is that with the dropping unemployment rate and shrinking foreclosure market, the 7% rates of yesteryear could return sooner than we realize . The time to purchase has never been better and buyers are certainly encouraged to take advantage of this opportunity before these record rates start their inevitable climb back upward.