This is no marketing scam. The low interest rates have spurred the type of marketing being used today by many institutions in the financial industry to attract potential customers. The current Prime Rate is 3.25%. The last time Prime Rate has been that low was in August 4, 1955. That was 55 years ago, which makes 2010 rates pretty historical.

What is Prime Rate?

Prime Rate is an index or benchmark used by financial institutions to help them determine what interest rates they should offer to the general public on deposit accounts, consumer loans and some business loans. Usually most home equity lines of credit and variable rate credit cards are immediately affected because their rates are tied to prime rate and will fluctuate up and down in unison with it.

Interest rates on savings accounts, CD’s, mortgages, fixed home equity loans, auto loans, personal loans and all other consumer loan products will be determined throughout the year by the lending institutions depending on the current prime rate at the time of their review. The fed meets several times a year to make changes that may force the prime rate to go up or down.

Rates Are Going Up

Rates have been pretty low for a long time now and it doesn’t take a rocket scientist or top-notch investment banker to know which direction they are headed in. They only have one way to go from here and that’s up. The real question is how long will they stay this low? Rates may slowly begin to rise anytime after April 2010. Read the 2010 Real Estate Outlook, it gives some good insight as to why that might happen. Even if they start to creep up a little bit they are still going to be very low rates historically.

The average rate for 30-year fixed loans fell to 4.19 percent in November, the lowest average on records dating back to 1971.

The average rate on 15-year fixed loans rose to 3.66 percent. That was up from 3.64 percent a week earlier.

Rates have been falling since April. They have remained low this month because investors have been buying up Treasury bonds in anticipation of the Federal Reserve’s likely move to buy Treasurys to stimulate the economy. That demand lowers Treasury yields, which mortgage rates tend to track.

Low rates haven’t helped the struggling housing market, which recorded its worst summer in more than a decade. But they have led to a modest surge in refinancing.

To calculate average mortgage rates, Freddie Mac collects rates from lenders around the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a given day.

Rates on five-year adjustable-rate mortgages averaged 3.41 percent, down from 3.45 percent a week earlier. Rates on one-year adjustable-rate mortgages remained at an average of 3.3 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.8 a point for 30-year loans. It averaged 0.7 of a point for 15-year and 1-year mortgages and 0.6 of a point for 5-year mortgages.


10 Responses

  1. Wow! What great interest rates. Sounds like a great time to buy and invest in a home. Great for first time buyers!

  2. I don’t think iterest rates are to low; I think this is to good of an opportunity for buyers looking to purchase homes to pass up. With these rates you can currently own for significantly less than rent. It is a no brainer that now is the time to buy!

  3. Amazingly written article. I couldn’t have said it better myself. Everyone needs to get off the sidelines and buy, there may not be another opportunity like this in our lifetimes.

  4. Thought I HAD a good interest rate @ 5.3. I am now refinancing and considering changing from a 30 year fixed to a 20 year fixed AND dropping my payment or changing to a 15 year fixed and only raising the payment by $150!

  5. The interest rate is amazingly low.. plus the significant drop in home prices would make this the perfect time to BUY!! I wonder how this recent election will affect the buyer/interest rate….. Probably should hurry and get financed, cause really can the rate go any lower???

  6. Not only is now a terrific time to purchase but refinance as well. I have heard of many people taking advantage of the low rates by refinancing ….even if it meant putting some cash in to the trasaction to make up for negative equity in the home. This decision should be on a case by case basis and best if discussed with your financial advisor, tax accountant and lender.

    For those interested in paying off their home sooner consider refinancing in to a 15 year mortgage at these low rates an you might be amazed the difference in payment is marginal.

  7. For anybody buying a home the interest rates are INCREDIBLE! It will allow many home buyers, who may not qualify for a home at a higher rate, to buy a home and achieve the AMERICAN DREAM!
    The down side to the economy is they help cause asset bubbles. For another, they hurt people and organizations—like seniors and non-profits—that depend on funding from fixed-income investments. For a third, they penalize people who are trying to do the financially responsible thing and save.

  8. For the traditional home owners whom are “on the fence” about upgrading into a larger/nicer home…NOW IS THE TIME! Upgrading in a down market, just makes good financial sense. Take advantage of these historically low interest rates today for that new(er) dream house you have been waiting for. “Sell now”? YES! Plain and simple, you may take a slight decrease in your equity on the sale of your home, but, with even lower prices on larger homes and incredible rates, you will more than make up for it with your next purchase. It’s much easier to trade up in a down market than in an escalating market!

  9. We have Good contacts at the REEVES Team for refinancing as well. How much will my house payment go down with a 4% rates and my taxes over the next few years lowering!! It Is time to buy, Nick!!

  10. With home prices & interest rates being so amazingly low, now is a perfect time to get into a home. Yes, home prices may decrease by another 10% but locking in the low interest rate now will is where the the real savings comes from over the life of the average 30 year home loan.

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