Mortgage Rates Plummet

Photo: Tony Casanova / Istock

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Thirty-year fixed mortgage rates, which nationally have averaged in the 6 percent range for much of the past two years, have fallen to 5.73 percent from 6.05 percent the previous week, the Mortgage Bankers Association said Tuesday.

As reported by the Salt Lake Tribune, fifteen-year loans averaged 5.21 percent in the week that ended Jan. 4, down from 5.61 percent the last week in December.

What does that mean? On a $200,000 loan at 6.05 percent, the monthly principal and interest payment would be $1,206. But at 5.73 percent, the bill would be $1,165, $41 less. According to Wells Fargo economist Kelly Matthews, the mortgage rates are expected to remain around this lower level for at least six months.

Already, the Tribune quoted industry sources as noting that refinance applications are up, to the tune of 40 percent, as a result of the rate change. "This is such a great time to buy or refinance a house," said Tim Roush of Veritas Funding.

In recent months, the U.S. housing market has been bad for sellers, with high default rates, lenders buckling, and large unsold inventories glutting the landscape. Prices have plummeted, by as much as 35% in some markets.

Lower mortgage rates allow more families to be able to afford their own homes, and may ease some of the pressure on the market. Time will tell if that results in more over speculation down the line (read: pressure by sprawl on wilderness and wildlife habitat), or whether it will simply be part of a course correction.

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