Mortgage Rates at Record Low: Is Now the Time to Lock In?
The average mortgage interest for a 30-year fixed rate fell to 3.89% last week according to Freddie Mac, hitting its lowest level since May. Homebuyers flocked to lock in these rates causing mortgage applications to jump 7.3% and the refinance index to increase 13% for the week. But many are asking, “could these interest rates go lower?”
CNBC anchor Brian Sullivan posed this very question to Collingwood Chairman, Tim Rood, on Street Signs yesterday. Rood told Sullivan that he thinks rates could go lower. “God help us if they continue to fall another 1 or 2%, but it’s certainly possible,” he said. Rood noted that the falling energy market, struggling stock market, and global economic uncertainty are good for interest rates.
“It’s beginning to look a lot like Christmas when you’ve got 30-year money below 4%, you’ve got unemployment dropping, and you’ve got incomes up. Things are setting up nicely.”
Sullivan also mentioned that Home builder CEO’s are saying mortgage lending standards are too tight and asked Rood if he thinks that the current lending standards are appropriate.
Rood responded, “We’re seeing policy makers do something, meaning they recognize a problem and they’re acting. This is Washington, that’s been unprecedented for a while.” The fact that FHFA announced that they are allowing Fannie Mae and Freddie Mac buy more mortgages with 3% down is evidence that they are trying to address some of the biggest reasons why people aren’t buying homes. He argues that people aren’t buying homes because they don’t have the money for a down payment and they don’t think they can qualify. “Anything you can do to remove the economic barriers or those credit constraints is good,” Rood says.
Many mortgage industry professionals we surveyed agreed with Rood on this. They expressed that the new low down-payment option makes owning a home more feasible for first time homebuyers. For the full results of Collingwood’s Mortgage Industry Outlook Report click here: