Mortgage Rates Hit their Lowest Point in 2014
Average interest rates on a 30-year mortgage dip below 4 percent.
A report released by Credit.com confirms that for the first time in 2014, the average interest rate on a 30-year fixed mortgage dropped below the 4 percent mark in the last few weeks of October. This is good news for buyers and may also be good for sellers, since lower interest usually means more prospective buyers enter the market to take advantage of the low rates.
In the second week of October, the average rate for a 30-year fixed loan dropped to 3.97. Rates continue to hold around 4 percent according to Mortgage News Daily. The rates on a 15-year fixed-rate mortgage were down at well – averaging 3.18 percent in the second week of October.
Low rates mean less money paid over the life of your loan
“As a homebuyer, getting into the housing market when interest rates are low can be invaluable,” says Maria Gaitan, Housing and Business Development Manager at Consolidated Credit. “Even when the difference between rates is less than one percent, this can equate to thousands of dollars or more saved over the life of a 30-year mortgage.”
Here’s some math to show what we mean:
- According to Bloomberg, rates reached a high point in the summer of 4.23 percent.
- So if a homebuyer qualified for the average rate at the high point this summer on a $150,000 mortgage, they would pay $115,015.66 in added interest over the life of the loan.
- But if the same homebuyer took out the same $150,000 mortgage now and qualified for a rate at 3.97 percent, they would only pay interest charges of $106,871.18.
- That means for rate difference of just 0.26 percent, the difference in total interest paid would be $8144.48.
- There would also be a slight difference in the monthly payments. A mortgage with 4.23% APR would have payments set around $736.15 (not including taxes and insurance), while a 3.97% APR mortgage would have payments of $713.53.
And that’s for a relatively low mortgage amount of $150,000. Bigger mortgages would mean and even bigger difference in interest charges and monthly payments. With that in mind, you can see why Gaitan says it’s worth it to work strategically when you buy a home.
“It’s in your best interest to be strategic when it comes to securing a mortgage at the lowest rate possible,” Gaitan confirms. “It’s better for your budget and your long-term financial goals.”
If you need more information on how to get into the housing market strategically, Consolidated Credit’s Housing Department can be the helping hand you need. We offer a wide range of Homebuyer Education materials, as well as a comprehensive 8-hour workshop designed to help you achieve your dream of homeownership successfully.
The next Homebuyer Workshop will be held here at our home office in Ft. Lauderdale, Florida on November 22, 2014 from 9:00 AM to 5:00 PM. To register, call us at 954-377-9167 or email firstname.lastname@example.org.