Mortgage Interest Rates Plummet For Another Week Says Freddie Mac

It may be hard to believe, but today 1/24/08,  Freddie Mac reported that the average mortgage interest rates for 30 year and 15 year fixed-rate interest rates dropped AGAIN substantially! Nationally the average mortgage interest rate for 30 year fixed-rate mortgages was 5.48% (5.46% in the southeast), down from 5.69% a week ago. This is the lowest it has been since March of 2004! The average interest rate for 15 year fixed-rate mortgages was 4.95%. down from 5.21% last week and for the first time in a long time it has gone below 5.0%.

Reports of lower housing sales in 2007, as well as a drop in building permits for future construction were indicators of a slowing economy and this helped cause another big drop in rates..

The interest rate drop was also helped by the Federal Reserve's drop in one of its key interest rates that I mentioned recently. They dropped it 0.75%. The drop along was large and it was also unusually in that the Fed did not wait until one of its regular meetings to act. The last time they took a similar unexpected action was just after the attacks of September 11, 2001. This time their cuts appear to have helped lower mortgage interest rates as well. When the banks have to pay less for money they get from the Fed, they can charge us less when we borrow it.

I hate to keep repeating this like a broken record, but with interest rates and home prices BOTH at low levels, this is a time for buyers who have been sitting on the sidelines to think about making a move. At some point either interest rates or home prices will start to rise, perhaps significantly. Both have lower limits below which they cannot practically go beyond. For example, developers will not build and sell homes that they cannot sell for enough money to cover their costs. Have we reached that point? In my opinion, we are close to it, if not already there. Do not wait too long or you might miss out on some great deals. As for how low interest rates may drop, their are many that think they can still go a bit lower if the Fed feels that it is necessary to stimulate the economy. But again, there will be a limit below which they will not be able to go.

Do keep in mind that we live in a very large and complex country. What happens in California is not necessarily what is happening in Florida. And what happens in Florida may be a far cry from what occurs in Michigan. Real estate is still very much a local issue.

If you want to learn more about Freddie Mac or see the details of their survey, go to: www.freddiemac.com  and click on the link for "Current Weekly Survey". They break down the survey by specific regions in the United States so you can see how your state compares to other parts of the country. They also explain the mission of Freddie Mac and offer a lot of useful information for consumers.

If you would like to speak with a lender you can find some at my website: www.jelwell.century21bnr.com . You can also speak with your own bank, credit union, or mortgage broker to see what your particular interest rate would be, should you decide to finance a home purchase.