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Mortgage Rates Fall, Saving Homebuyers Thousands
September 11, 2008 11:02 AM
ABC News' Scott Mayerowitz reports: While shareholders might have lost out in the federal government’s bailout plan for Freddie Mac and Fannie Mae, people looking for a new mortgage might have won big.
The rate for a 30-year fixed mortgage this week fell to an average of 5.93 percent, according to Freddie Mac. That’s down from 6.35 percent just last week.
A family with a $200,000 mortgage taken out last week at 6.35 percent would have monthly payments of $1,244.47. At this week’s rates, those monthly payments drop $53.35 to $1,190.12
That $50 might not seem like much, but the interest savings over 30 years is actually pretty substantial: $19,568.30.
Also, keep in mind that last year at this time, the average 30-year mortgage was 6.31 percent. Since that time the Federal Reserve has cut interest rates several times but mortgage rates never followed because banks shaken by bad loans were hesitant when making new ones.
Frank Nothaft, Freddie Mac’s vice president and chief economist, said these new, lower rates “will help to spur home purchases and loan refinancing in coming weeks.”
Given falling home prices and continued foreclosures this might just be the shot in the arm that the housing market needed.
September 11, 2008 | Permalink | User Comments (13)
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How long will this last ? Will the rates keep going down because of the buyout ?
Posted by: Shaun | Sep 11, 2008 11:42:46 AM
Barrel of oil keeps going down too but the gas stations around me haven't been going down. We're still around $3.90/gallon. I'm always skeptical when reporters make assumptions based on some average.
Posted by: rktman | Sep 11, 2008 12:06:34 PM
Well it hasn't been coming down. Now the question is, is there money out there to fill the demand, or all the banks going broke? The other question; who will qualify for this new low interest rate? Then again are there any buyers out there?
Posted by: Thinking | Sep 11, 2008 12:34:57 PM
No wonder mccain wants to talk about lipstick, it leaves less time to talk about the financial mess this administration has caused.
Posted by: pt | Sep 11, 2008 1:07:40 PM
So, will we now allow people with bad or no credit to buy homes they cannot afford? Then expect the gov't to bail them out? Everybody was so happy for 4 to 5 years when they were buying and selling homes and making tons of money. Then it stopped and hundreds of thousands cried "predatory lending tactics" even though they knew full well their rates would go up in a few years. I wonder who they will blame this time around. Bush won't be in office so they'll have to blame Obama or McCain for their failures.
Posted by: Doug | Sep 11, 2008 1:10:45 PM
The financial mess has caused much stress...For many it is a simple miscalculation, for others it was misrepresentation...How does one recoup, and begin again...Through the Government helping to start again..for this is the reason that many have lost their homes, lost their jobs because of conglomerates who gained more and more...the government sets the stage of what we have and what we can save...nothing is free..but to earn a living knowing that we fight against industries who move overseas, market strategies that leave the American dream, gains that hurt the poor and women, this is an atrocity of our nation...Failure brings change...and change renews hope..but to loose one's house is a slap in the face when America is to provide a piece of dirt to every citizen no matter how smart, no matter what there toll...As our nation is spread wide and thin...the government is the Boss of what we gain and loose...despite the elite who share little, its been all about worth rather than thy brother to help...Nothing is greater to look upon than to see the wealthy adopt a family to help them get on their feet...this should be done rather than talks and parties that provide lavish dishes while others go hungry...We don't go hungry because we are lazy...we go hungry because our government cheated the poor and under nourished for political stronholds and friends of friends to run Big Business...Apachecheynne
Posted by: Apachecheynne | Sep 11, 2008 3:00:24 PM
Do a barrel roll
Posted by: Anonymous | Sep 12, 2008 1:16:58 AM
All this talk about lower interest rate
is a day late and a dollar short for the
people that have lost their homes to forecloser. Now they are SOL and cannot refinance or buy a home.
Posted by: Patsy Wells | Sep 12, 2008 3:36:44 AM
I'm not an expert, but I'm in the process of buying a home right now, and I'm one of the people the drop in interest rates has helped significantly! I was able to renegotiate the rate from 6.625 to 6.0, saving me over $30,000 over the life of the loan! I'm thrilled!
Just to answer the concerns of some other commenters, this article is talking about the rates for 30-year fixed rate mortgages. There's no risky raise-your-rate-in-five-years stuff going on here. People still might be being sold mortgages they can't afford, but it won't be because their payments suddenly go up a few years down the road.
Posted by: Emily | Sep 12, 2008 12:13:17 PM
Briana,
I have a question about the situation.
What happens if there is big inventory, less investor interest, and money in the financial market?
Posted by: PM | Sep 12, 2008 1:59:41 PM
I agree with Apachecheynne
this is so very true...
Posted by: Anonymous | Sep 14, 2008 10:04:38 PM
I guess lower priced homes sound good to those who want to buy the homes and rent them out. Which is what is happening in my neighborhood. Two to three families renting, tearing up the home property and neighborhood. I am one of the original homeowners still here, and if things don't get better I might loose my home to foreclosesure. I cannot even think of selling, My home value dropped so low I will never break even. Some Lenders are no longer willing to forgive that amount still owed after selling at a lower price than the mortgage due. But if it is forgiven, You have to count it as income when you do your income taxes.
Posted by: mere | Sep 15, 2008 2:49:31 AM
The answer is don't buy a home you can't afford. Actually read the mortgage contract before you sign.
Posted by: Common Sense | Dec 19, 2008 7:38:54 AM
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