What Historically Low Mortgage Rates Mean for You | St. Johns Bank
If you’ve heard people talking about “historically low mortgage rates” for about half the year so far and assumed there’s no way it could be true that whole time, we have good news: It is.
Not only have the rates stayed remarkably low for that whole time, they continue to plumb new depths on a seemingly daily basis. But what does that all mean and how does it affect you? A lot and it depends on whether you own or want to buy a house, in that order.
What Are Mortgage Rates?
Put simply, the mortgage rate is how much debt on a house will cost you. It’s the interest charged on a home loan, so basically what you pay the lender on a monthly basis for the money up front.
There is a number of options available for how interest on a loan is handled, including fixed, variable and adjustable after certain numbers of years. You also have choices when it comes to how long the mortgage lasts, with 15- and 30-year loans the most common.
The former typically has lower rates, but higher monthly payments due to the shorter term, while the latter comes with higher rates and will incur significantly larger interest payments over the life of the loan.
Record Lows = Great Time to Buy or Refinance
So, lower rates mean lower monthly payments and less debt cost over the life of the loan. Which means this may be the perfect time to buy or refinance if keeping more of your money in your pocket is important to you.
Federal lending giant Freddie Mac keeps a record of 30-year mortgage rates that dates back to 1971. As of October, it showed the rate at 2.83%, down from 2.89% in September and 2.94% in August.
How low is that, in historical terms? Well, the previous all-time low was 3.35%, notched in back-to-back months at the end of 2012, which means we’ve been uncharted territory since April when the number first tumbled to 3.31%.
As for 15-year loans, they were at 2.35% in October. The previous low there was 2.66%, which we last saw in April 2013.
The rates’ historic positions are averages of what people are paying across the country and, while they’re recorded by the month, they change on a daily basis. That means the number you see in the news reports may not be the rate you actually pay if you take out a loan or refinance right now.
If you’re ready to take advantage of this historic opportunity, the mortgage experts at St. Johns Bank are ready to help you find the best loan for you.