The week of October 15 marked the third week in a row in which 30-year mortgage rates remained below 5%, according to secondary mortgage market maker Freddie Mac. Moreover, those benchmark mortgage rates have held within a narrow 20-basis point range (a band of 0.20%) for over a month now, a remarkable period of stability.
This stability comes with mortgage rates near all-time historic lows. You can get an even lower mortgage rate if you can afford to shorten up from a 30-year to a 15-year mortgage. According to current mortgage rate data from HSH Associates, the average 15-year mortgage rate is about 0.55% lower than the average 30-year mortgage rate.
Whether you opt for a 15-year or 30-year mortgage, the main goal should be to act quickly if you are looking to buy or refinance. The recent stability in mortgage rates may not last for long.
Changes in Mortgage Rates on the Horizon?
Before taking today's mortgage rates for granted, potential mortgage shoppers should realize what rarefied territory these rates are in. Prior to this year, the monthly average for 30-year mortgage rates had never dipped below 5% in the 35-plus years for which government records exist. Expecting them to continue in that range would really be defying the odds.
Meanwhile, the latest Consumer Price Index release from the US Bureau of Labor Statistics suggests that the deflationary period may be giving way to a return of moderate inflation. Inflation would put upward pressure on all interest rates, including mortgage rates.
Taking Advantage of Current Mortgage Rates: What You Should Do
How you react to this rate environment depends on your situation. Here are some possibilities:
- If you've been considering buying a house, don't delay. Even if you might not make the deadline for the $8,000 home buyer tax credit, you wouldn't want to miss out on another good deal by letting low mortgage rates slip away.
- If you can benefit from refinancing at today's mortgage rates, contact your mortgage lender sooner rather than later.
- Whether you are buying or refinancing, lean toward a fixed-rate rather than an adjustable-rate mortgage. When rates are near all-time lows, why risk seeing your mortgage payment go up in the future?
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.
