If you’re in the process of either refinancing or out shopping for a home, you’re probably aware by now that interest rates can change from day to day. In fact, sometimes they can even change during the course of a single business day; although that doesn’t happen very often. If you have been waiting for rates to drop a bit further, for whatever reason, it might be a good idea to take a serious look at locking in your rate.
Mortgage rates from one lender to the next are typically very close and often the only difference might be in the fees associated with the loan. To get a sense of how mortgage rates in general are trending, most look at a weekly mortgage rate survey performed by mortgage giant Freddie Mac. This weekly index will show a national average on different loan types such as a 30 year, 15 year and a 5/1 hybrid and rates have been trending downward.
According to the survey on June 16 of this year the average 30 year rate was 3.54% while exactly one year ago the same survey reported the average rate was around 4.00%. That’s a significant trend and inching closer to the historic low hit in late 2012 when the 30 year rate hit 3.32%.
It’s important to note how these rates are calculated. Currently, Freddie Mac surveys about 125 different lenders from all regions across the country and many of these lenders are large retailers with a national presence. Typically such lenders are banks that don’t necessarily have to offer the lowest 30 year fixed rate to their loyal customer base which means you can almost always find a lower rate than what Freddie Mac reports. That said, the trend is unmistakable. Mortgage rates have become cheaper. The next question is- will they become even more so?
Loan officers are always asked that question and the standard answer is that no one can predict what rates will do but if current market rates are competitive now and you’re in a position to lock in your loan, it might be a good time to do so. If rates go lower sometime in the future, you can always refinance. If you wait and decide not to lock and rates go higher, you may be locking in a higher rate when you really didn’t have to.
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