Freddie Mac: Mortgage Rates Now Average 3.84%
Mortgage rates made their biggest 1-week drop since January, according to Freddie Mac.
This week’s Primary Mortgage Market Survey (PMMS) puts 30-year mortgage rates for conventional loans at 3.84%, on average — a drop of 9 basis points (0.09%) from the week prior.
Interest rates dropped for other loan types last week, too.
Rates for FHA loans, USDA loans, and VA loans each improved. VA mortgage rates remain the “cheapest” of the lot. It’s an excellent time to refinance your home, or complete the purchase of a new one.
Mortgage rates and APRs are firmly in mid-3s and mortgage lenders are approving more loans nationwide.
Mortgage Rates Best In 3 Months
The average 30-year fixed-rate conventional mortgage rate dropped 9 basis points (o.09%) this week to reach 3.84 percent, on average, nationwide.
The rate — which is based on a survey of 125 U.S. lenders — is available to borrowers paying 0.6 discount points at closing, plus a full set of closing costs.
Closing costs vary by state and are highest in Texas, Alaska, and New York. Costs are lowest in Tennessee and Nevada.
Borrowers can elect to “waive” closing costs via a zero-closing cost home refinance in which the lender pays costs on a borrower’s behalf in exchange for a slightly higher mortgage rate.
A zero-closing cost mortgage typically raises the rate on a $250,000 home loan by one-quarter point.
Freddie Mac reports that 15-year mortgage rates dropped last week, too. The popular, shorter-termed loan shed 9 basis points (0.09%) to 3.06%, on average, nationwide.
Freddie Mac’s published rates are available to prime mortgage borrowers.
A “prime borrower” is defined as one with a credit score of 740 or higher; with a purchase downpayment of twenty percent or more; with a debt-to-income ratio which meets mortgage guidelines; and, with ample reserves to support a mortgage approval.
Loans for prime borrowers are loans made against single-family residences including detached homes, certain town homes and attached properties; and condos which meet minimum eligibility standards.
The Freddie Mac survey does not reflect FHA mortgage rates or VA mortgage rates, nor does it show rates the for no-money-down USDA loan.
Freddie Mac’s figures are for conventional loans only.
Millions Now “In The Money” To Refinance
Freddie Mac puts this week’s average mortgage rate at 3.84%. In historical context, this is dirt-cheap. Since 1971, 30-year rates have averaged closer to 8.25%.
However, rates aren’t just cheap as compared to the long-term — they’re cheap as compared to even last year.
Because of this, literally, millions of U.S. homeowners are in the money to refinance.
When you’re “in the money” to refinance, it means that you stand to reduce your mortgage rate by 150 basis points (1.5%); you have at least $50,000 remaining on your loan balance; and, your loan has at least 10 more years until it’s paid off.
Plus, there are huge numbers of homeowners whose current rates are more than 50 basis points (0.50%) above than today’s going rate, which can make a refinance opportunities available.
Even better is that banks are more willing to approve refinance applications.
According to data from Ellie Mae, the closing rate for a refinance application topped 60% in July. Last year, closing rates were barely over half.
It’s getting easier to get approved.
Some of today’s popular refinance loans include:
- The Home Affordable Refinance Program (HARP) : For homeowners with underwater conventional loans which pre-date June 2009
- The 97 LTV loan : For homeowners with conventional loans and 3% home equity or more
- The FHA Streamline Refinance : For homeowners with an existing FHA loan who want to lower their mortgage rate and payment
- The VA Streamline Refinance : For homeowners with an existing VA loans who want to lower their mortgage rate and payment
- The USDA Streamline Refinance : For homeowners with an existing USDA loan who want to lower their mortgage rate and payment
- The Conventional Refinance : For homeowners with at least 10% home equity wanting to refinance a conventional loan, or to refinance to cancel FHA MIP
Current Freddie Mac data shows that the median age of a refinanced mortgage was 5.6 years last quarter. The typical refinancing homeowner, therefore, lowered its mortgage rate 250 basis points (2.50%), which yields an annual savings of more than 35 percent.
Don’t be concerned for closing costs too much, either. Long-term, a refinance to low interest rates will save more money than it costs — especially when the refinance is a done as a zero-closing cost refinance.
Homeowners who refinanced last year will save $5 billion combined during the first 12 months of payments. With 2015 mortgage rates down again, this year’s refinancing homeowners will save even more.
It’s an excellent time to explore your refinance options.
What Are Today’s Mortgage Rates?
Mortgage rates are down but may not stay low for long. Consider your options to refinance; and, explore what homeownership might look like at today’s cheap rates.
Take a look at today’s real mortgage rates now. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Try the Mortgage Calculator