You've probably heard it on the news... 30-year loan rates have dropped to their lowest levels in 37 years!
What caused this? It's a result of the Federal Reserve pouring money into the mortgage market to spare the U.S. housing market, buying up $600 billion of mortgage securities and related debt. Additionally, the Fed, aiming to jump start the economy, cut its key interest rate from 1% to .25%. This resulted in 30-year fixed mortgage rates falling to 5.19 percent the weekend before Christmas, and have continued to fall for the second week in a row, reaching rates below 5 percent.
So what does this mean for you? It may be an incredible time to buy, as fixed mortgage rates combine with declining home prices. Lenders' phones are ringing off the hook with on-the-fence buyers looking to inquire about financing, and those with stellar credit wanting to refinance. Different lenders have varying criteria for who qualifies for these rates, so it's important to shop around.
Keep an eye out for more related articles as housing industry lobbyists continue to put pressure on Washington to further support the industry and entice potential home buyers.
I've included a chart taken from the Washington Post which shows trends in the common indexes used to set rates on adjustable mortgages.