Rate on 30-year mortgage slips to 3.34 percent
WASHINGTON (AP) - Average U.S. rates on fixed mortgages moved closer to their record lows this week, a trend that has made home buying more affordable and helped sustain a housing recovery.
Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan slipped to 3.34 percent from 3.35 percent last week. That's near the 3.31 percent rate reached in November, the lowest on records dating to 1971.
The average on the 15-year fixed mortgage ticked down to 2.64 percent from 2.65 percent last week. The record low is 2.63 percent.
The 30-year fixed mortgage rate averaged 3.66 percent in 2012, the lowest annual average in 65 years, according to Freddie Mac.
Cheaper mortgages are a key reason the housing market began to come back last year and many economists predict the recovery will strengthen in 2013.
In November, sales of previously occupied homes rose to their highest level in three years, while new-home sales reached a 2½ year high. Home prices are steadily increasing, which makes consumers feel wealthier and more likely to spend.
Another reason for the recovery: the nation doesn't have enough houses for sale. The number of new homes available for sale at the end of November was just slightly above the lowest on records dating to 1963. And the supply of previously occupied homes for sale was at an 11-year low that month.
A limited supply has created demand for new construction, which has made builders more confident.
Lower mortgage rates also have persuaded more people to refinance. That typically leads to lower monthly mortgage payments and more spending. Consumer spending drives nearly 70 percent of economic activity.
Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can't qualify for stricter lending rules or they lack the money to meet larger down payment requirements.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans edged down to 0.6 from 0.7 point.
The average rate on a one-year adjustable-rate mortgage rose to 2.57 percent from 2.56 percent. The fee for one-year adjustable-rate loans dipped to 0.4 from 0.5 point.
The average rate on a five-year adjustable-rate mortgage ticked up to 2.71 percent from 2.70 percent last week. The fee declined to 0.6 point from 0.7.
Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan slipped to 3.34 percent from 3.35 percent last week. That's near the 3.31 percent rate reached in November, the lowest on records dating to 1971.
The average on the 15-year fixed mortgage ticked down to 2.64 percent from 2.65 percent last week. The record low is 2.63 percent.
The 30-year fixed mortgage rate averaged 3.66 percent in 2012, the lowest annual average in 65 years, according to Freddie Mac.
Cheaper mortgages are a key reason the housing market began to come back last year and many economists predict the recovery will strengthen in 2013.
In November, sales of previously occupied homes rose to their highest level in three years, while new-home sales reached a 2½ year high. Home prices are steadily increasing, which makes consumers feel wealthier and more likely to spend.
Another reason for the recovery: the nation doesn't have enough houses for sale. The number of new homes available for sale at the end of November was just slightly above the lowest on records dating to 1963. And the supply of previously occupied homes for sale was at an 11-year low that month.
A limited supply has created demand for new construction, which has made builders more confident.
Lower mortgage rates also have persuaded more people to refinance. That typically leads to lower monthly mortgage payments and more spending. Consumer spending drives nearly 70 percent of economic activity.
Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can't qualify for stricter lending rules or they lack the money to meet larger down payment requirements.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans edged down to 0.6 from 0.7 point.
The average rate on a one-year adjustable-rate mortgage rose to 2.57 percent from 2.56 percent. The fee for one-year adjustable-rate loans dipped to 0.4 from 0.5 point.
The average rate on a five-year adjustable-rate mortgage ticked up to 2.71 percent from 2.70 percent last week. The fee declined to 0.6 point from 0.7.
"Home prices are steadily increasing, which makes consumers feel wealthier and more likely to spend."
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And that is one of the causes financial crashes. Just feeling wealthier does not make them wealthier.
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Most consumers have no idea about finances. Much of that has to do with lack of schooling on the subject. Currently the credit debt of the US is averaging $15k. Just before the crash it was climbing dramatically and went to $19k. Once the crash happened many lost their jobs and filed for bankruptcy which cost the banks billions.
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Today student loans are 1 trillion and CAN NOT be discharged in bankruptcy. Pretty scary and I would not want to borrow a lot of money in this economy. Especially when there is unemployment in the 25% range of new college graduates. They will be unlikely to pay it off unless they move in with mom and dad.
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Low interest rate mean nothing if there aren't any people to borrow the money.
 @RalphCramden Works for my wife and I. Our house is scheduled to be completed this month. We locked at 3.5% and our income to debt is minimal even with student loans. I was raised on "If you don't have the money, don't spend the money." We don't have credit cards or car payments. We pay everything in cash. (Except our home now).
 @mikeyb123Â
I was raised the same way. My first house I bought I put down 30%. My second and third were only 20% but we were in the middle of massive 20% inflation and the bankers knew that the homes would appreciate in value very fast (they almost doubled in price in less than 5 years).
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Borrowing money is not my thing although I did borrow money to buy a car a few years back. I got the loan for 1.75% and total interest for the loan was $135. If I took money out of saving for that I would have paid a lot more in taxes so this was a good move financially.
 @RalphCramden Bravo! That's the good sh*$ right there. :-)
 @mikeyb123Â
That is exactly the way to do it. I have never bought so much that we couldn't pay it off with only one salary. This allowed us to save one whole salary every year for decades.
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At one point we were putting away over 40k per year. It allowed us to retire early and afford the things we wanted to do.
 @RalphCramden Yeah, we have had car loans. My wifes car and my "toy" Jeep. But, we didn't buy anything else until they were paid off. It just makes me nervous knowing that I owe people money that wasn't mine to begin with. As this is our first home, owing someone 200K is a scary thing for us. BUT, we also didn't bite off more than we could chew. If one of us lost our job, we could still pay the mortgage. We would be feasting on Top Ramen...but we could do it.