Since 1971, today’s mortgage rate on a 30 year fixed is the lowest ever. The rates have fell down to 5.01%. This is incredible news for able first time buyers and seasoned investors. It has been falling each week for the past 10 weeks.

Last year at this time, a 30 year fixed rate was 5.87%, and last week it was 5.10%. Can we possibly suspect it to go under five percent? I’ve been calling this to happen 2 months ago but all my mortgage lender colleagues claimed that it was impossible. The economy is in rough shape, but the world continues to spin, folks. These dropping property prices and dropping mortgage rates are not going to last forever. There just is no possible way for the United States to crumble and stay down. That’s not how the economy works, the economy goes through cycles, and what’s happening now is no different.

And why are the mortgage rates dropping? It’s because the Federal Reserve’s decision to buy mortgage backed securities from Fannie, Freddie, and Ginnie. On November 25th, 2008, the Fed announced its plan to purchase up to $500 billion dollars of these securities by June 2009. And to compare the amount that the Fed is buying and the available amount of the securities… The amount of available securities is $4.7 trillion dollars.

For other rates, here they are:

15 year fixed rate: 4.62%, which was 4.83% last week

5 year Treasury indexed ARM: 5.49%, which was 5.57% last week

1 year Treasury indexed ARM: 4.95%, which was 4.85% last week (the only rate that rose from last week)

And to make the point clear, do you know what these changes in rates mean for you? If we’re talking about a $200,000 property, a 1.5% difference in rates, equals savings of $184 dollars per month.

Incredible.

This entry was posted on Friday, January 9th, 2009 at 4:37 pm. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.