Today 12/06/07, Freddie Mac reported that the average mortgage interest rates for 30 and 15 year fixed-rate loans dropped again significantly from last Thursday's averages. Nationally the average mortgage interest rate for 30 year fixed-rate mortgages was 5.96% (5.94% in the southeast), down from 6.10% a week ago. The average interest rate for 15 year fixed-rate mortgages was 5.65%, down from 5.73% last week.
These drops are quite large considering that as recently as October 27, 2007 the average rate on a 30 year fixed-rate loan was 6.33% Over the length of a loan this can save buyers a considerable amount of money.
Home prices rose only 1.8% nationwide over the past 12 months ending this past September. This was the slowest growth rate since 1995. Not surprising after the superheated market in 2004 and 2005. Interest rates on Treasury securities fell and mortgage rates followed their downhill path.
Freddie Mac also reported that non-farm productivity was up and yet production costs were down. This made it possible for companies to avoid raising prices (though I wonder what effect the higher energy costs will have). This means that the Federal Reserve should be less worried about inflation and may have more options when it comes to lowering their interest rates in the coming weeks and months. The main problem that still remains is that homebuyers must have good credit to get loans. Lenders are loathe to lend on the subprime market that has gotten them into so much trouble and has caused the rash of foreclosures. However, people with excellent credit might have the banks and mortgage lenders VERY interested in lending them money. I recently had a buyer with an 810 FICO score, and two lenders were bidding lower and lower on the interest that they would charge her. They also offered her a 30 fixed rate mortgage on a mobile home which is not that common.
Do keep in mind that we live in a very large and complex country. What happens in California is not necessarily what is happening in Florida. And what happens in Florida may be a far cry from what occurs in Michigan. Real estate is still very much a local issue.
If you want to learn more about Freddie Mac or see the details of their survey, go to: www.freddiemac.com and click on the link for "Current Weekly Survey". They break down the survey by specific regions in the United States so you can see how your state compares to other parts of the country. They also explain the mission of Freddie Mac and offer a lot of useful information for consumers.
If you would like to speak with a lender you can find some at my website: www.jelwell.century21bnr.com . You can also speak with your own bank, credit union, or mortgage broker to see what your particular interest rate would be, should you decide to finance a home purchase.
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