Mortgage Rates Remain at Historic Lows

May 12, 2015 9:24:32 AM

According to Freddie Mac, the national average for a 30-year fixed rate mortgage was up just slightly to 3.78 percent in March 2015 from the previous month. Rates remain at historically low levels.

Mortgage rates are more than just the interest rate on a homeowner’s mortgage. They are also a reflection of the return on investment that investors require to risk betting on mortgage-backed securities.

Many people think mortgage rates are controlled by the Federal Reserve and can be arbitrarily turned up or down at any given time. While it is true that the Fed affects rates, it does not act alone.

Mortgage rates are affected by Federal Reserve policy, bond and Treasury investments, mortgage-backed securities, the housing market and the current U.S. economic climate. For a look at these factors in more detail, review our earlier Market aha post on mortgage rates.

The aha

Mortgage rates change daily, so understanding trends is just as important as knowing the current rates. With rates remaining low, it is expected that more people will apply for a mortgage loan in 2015.

The Mortgage Bankers Association reported that in the week ending on March 20, 2015, mortgage applications were up 9.5 percent. The number of mortgage applications continues to rise year over year indicating increased home sales.

What does this mean for your real estate business? If people are buying, your clients might want to consider selling while interest rates remain low.

Calculating Mortgages

When buying a home, one of the most important factors for a buyer is affordability. Your KW Mobile App has a built-in mortgage calculator. Your clients simply enter the sale price, down payment percentage, mortgage length and interest rate. The result will be an estimated monthly payment. Keep in mind this does not take into account insurance and taxes. Although this calculator gives a good starting estimate, clients should speak to their lender for a complete monthly payment.

Market aha information that helps you help your clientsThis is the second article in the series for Q1 2015

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