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Mortgage Rates: Down but will they continue to drop?

You can see how rates have declined week over week
You can see how rates have declined week over week
Freddie Mac

Year to date mortgage rates have dropped nearly .410% or a tad under ½ point. Starting the year at 4.530% each weekly rate survey have seen rates decline. Currently they are at 4.120%, based on the benchmark 30 year fixed rate mortgage.

The low rates are a nice economic stimulus for consumers who are lucky to qualify for a purchase or refinance transaction. Purchase activity has picked up slightly and the impact is less strain on their budget or being able to qualify for a higher mortgage. For those refinancing, the savings represents more money back in their pockets.

As nice as it is to tout low rates, due to increased employment opportunities many consumers are positioning themselves to get back in the game. Low rates are great but if you can’t qualify or otherwise participate in the economy, they are meaningless.

Lenders have relieved their processing pipelines so consumers are in a much better closing position. At the beginning of the year 60 day closing on refinancing was common-place. Currently that timeline has been trimmed down to 30-45 days. Of course purchase closings are dictated by close of escrow so rate movement has less impact. The key is being able to gauge rate movement and have the ability to lock-in the rate. On the other hand, even though there has been a steady decline, the concern for those who are positioning a transaction is how long they will remain low?

The rate survey is provided weekly by Freddie Mac. Lenders submit data representing their average mortgage rates

Here is a breakdown of rates for popular loan programs:

30 year fixed rate - 4.120%
15 year fixed rate - 3.230%
5/1 ARM - 3.010%
1 Year ARM - 2.380%