Mortgage Rates Fall To Record Low
But that doesn't mean you can get a rock-bottom rate
09/08/2011 | By Mark Huffman
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ConsumerAffairs.com
| FinanceIf you want to buy a home or refinance one, it would seem there's no better time than now. Mortgage rates have fallen to an all-time low, according to Freddie Mac.
In the week ending today, the average rate for a 30-year fixed rate mortgage fell to 4.12 percent, down from 4.22 percent. The average 15-year loan is now down to 3.33 percent.
But as you begin to eagerly shop mortgage companies for one of those bargain rates, you might have a hard time finding one quite that low. The lowest rates are reserved for consumers with the most stellar credit ratings. Credit that is only “excellent” often results in a slightly higher rate.
Meanwhile, a report by SmartMoney suggests the recent spread in rates has less to do with credit scores and more to do with higher profit margins at some lenders. The report cites data from Informa Research Services as saying lenders in the last month have added as many as two percentage points to their profit margins.
Applications down
So, while the rates sound very enticing, some consumers decide not to borrow when they find the loan will cost more than they thought. The Mortgage Bankers Association (MBA) reports mortgage applications fell 4.9 percent from the previous week in the week ending September 2.
“Heading into the Labor Day weekend, the 30-year rate was at its second lowest level in the history of our survey, and the 15-year rate marked a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Despite these rates however, refinance application volume fell for the third straight week, and is more than 35 percent below levels at this time last year. Purchase application volume remains relatively flat at extremely low levels, close to lows last seen in 1996.”
The refinance share of mortgage activity decreased to 77.1 percent of total applications from 77.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.1 percent of total applications from the previous week.
