I get asked questions all the time about mortgage rates. First, what are rates today? When that is answered, the next question is invariably, "where do you think interest rates are headed?" So, here's my answer for today, 25 January 2012. Rates are going to be posted every day on this blog just below the big logo. As for mortgage rates, I believe they've found a floor at 3.75% for a 30 year fixed and 3.25% for a 15 year fixed. You might see them pop below those rates for a day at a time but this seems to be a floor for now. The Federal Reserve has stated that they will maintain their 0% interest rate through 2013, so given the fact that there needs to be a yield on interest rates (profit) the mortgage rates need to stay where they are without dropping in order for investors to stay in the market and provide funds for mortgage lending. So, rates are perfect for locking in now at historically low rates. Don't get too greedy, get an awesome rate and get it done.
Given these facts, a drastic thing could happen and rates could go lower, but I don't see it. If you can lock in now at 3.75% on a 30 year fixed or a 3.25% on a 15 year fixed, do it! ONE NOTE ON APR. A lot of borrowers do not understand APR and overlook it. Here is the key: the closer your APR is to your actual interest rate the LESS FEES YOU ARE PAYING! Don't get fooled by local credit unions or banks by saying 15 year rates are at 3% when their APR is 3.257%. If your APR is more than .15% higher than the actual rate, you are paying for it in closing costs and probably not saving much per month. A recent borrower of mine with a $225,000 loan amount asked about this exact scenario. I locked him at 3.25% with an APR of 3.34% and the local credit union was advertising a 3% rate with an APR of 3.257%. So, in order to get the rate of 3% with them it would have cost him $3700 in EXTRA closing costs, and the .25% would have saved him $29 a month. Not worth it!
Call me with questions about rates if you are interested and need help.
