Thursday, June 19, 2014

Mortgage Rates Update

It's Thursday -- Freddie Mac Day in my world.  It's the day each week that Freddie Mac posts the results of its weekly survey on mortgage interest rates, showing us what kind of interest rate and fee the average American paid and received for new mortgage loans.

The results are as follows:

So what's it all mean?  Easy when you know how to calculate a monthly payment, and even more interesting when you look at the history.

The 30-year mortgage rate at 4.17% means that, for every $100,000 you borrow, your monthly payment will be $487.27.  For that money, you will pay a fee at closing of 0.6% of the amount you borrow, so for every $100,000 you borrow, that will be $600.

The less oftentimes used 15-year mortgage rate at 3.30% results in a monthly payment of $748.24 for every $100,000 borrowed.  The fee for those monies is less at 0.5%, only $500 for every $100,000 borrowed.

Not bad.  But know that it's not bad solely because we're used to this.  Take a look over the past year to where interest rates have been.

That top blue line shows the history over the past year of 30-year money.  The red line under it is 15-year rates.  Note what happened about this time one year ago.  Ouch.  The rates increased a solid 1/2 percent, and for the most part stayed there most of the year.  We're seeing mildly better rates in the past 2-3 months, but it's pretty flat.  We're used to it.

That's a far cry from when the Bank of the United States was created in 1791, with Alexander Hamilton at the helm.  Rates at that time were a bit worse than 7%.  

Call me as you need.  I'm always here for you.

Enjoy the day,
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