Mortgage rates continue to fall this week as data rolls in for December 2014. Since December of 2013, mortgage rates have been steadily dropping, nearing 4.0%, as of December 3, 2014.
On December 5, the 30-year rates dropped below 4.0%, at 3.89%– the lowest rate since May 2014. The benchmark 30-year fixed mortgage rate was 4.07%, down .01% from the previous week (based on monthly payments for a $165,000 loan). This comes after the 30-year fixed-rate average was 4.01% in November. Comparatively speaking, the 30-year fixed-rate average in 2013 during the holiday season was 4.35%. A year ago at this time, interest rates were projected at being above 5%.
The 15-year fixed-rate average was 3.29%, and the 5-yer ARM was 3.2% for the week of December 3. The 15-year fixed-rate experienced no change from the week of November 26, while the 5-year ARM rate increased .01%.
According to Janna Herron of Bankrate, these deflations can be blamed on concerns about global health, which corresponds to the increased interest in purchase of US bonds.
So what do low mortgage rates mean to potential homebuyers? A mortgage rate ultimately determines the monthly payment on the long term loan, and higher mortgage rates translate to higher monthly payments, figuring into the total amount of interest ultimately paid on a loan. On a 30-year, $200,000 mortgage with a fixed interest rate of 4.0%, homeowners would pay $8,000 over the course of the mortgage, while the same mortgage with a 5.0% rate would translate into $10,000. For this reason, many homebuyers often shop around for low mortgage rates and follow market trends to help determine the best time to secure a loan.
Applications to purchases mortgages are up in response to these mortgage rate trends, with more young people applying for loans, and securing long term mortgage rates. According to Chapel Hill real estate agent Jodi Bakst, there are also more financing options for North Carolina buyers, thanks to the NC Finance Agency, which is offering a 5% down payment assistance on government loans and 3% on conventional loans. With interest rates at an all time low for 2014, it will be interesting to see how the housing market will develop in 2015.