Historical Mortgage Rates: Mortgage Rates Fall Again
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Today's economy is very dependent upon mortgage interest rates. Right now the interest rates are very low. This, of course, is good. Today, a 30-year mortgage can be obtained for about 6%, maybe less. At 6%, a $200,000 mortgage for 30 years would result in a monthly payment of $1,199.10.
When looking at historical mortgage rates, it is quite obvious that the current long term trend is down. During the last major recessionary period of the early 1980s mortgage rates peaked at 17.5%. Since that time, rates have steadily declined to their current levels of today; around 4.8%. There have been upticks along the way, but the overall trend is down. At one point, there is going to be a bottom in mortgage rates which leads to a steady increase. It is highly unlikely that rates will ever get close to 17.5% again, but if history repeats itself, they are going to have to increase well above today's historically low levels.
Mortgage rates are nice to look at but what do these mortgage rates flucatuations mean for a mortgage. Using our free mortgage calculator we can run the numbers and see how these mortgage rate changes would affect the mortgage on a 200k loan. For a 30 Year mortgage on June 5th the monthly mortgage payment would have been $1210.69. Three week later on June 26th a mortgage on the same amount would have risen 4% to $1257.56. Now another 3 weeks the mortgage payment has fallen 2% to $1232.73
In 1938, Fannie Mae was instituted. This put mortgage rates into a particular market. Before this time, mortgage rates varied wildly from lender to lender and between different areas of the country. With Fannie Mae, loans could be sold between different institutions. Having more people involved in a market tends to stabilize the price of the underlying commodity. Back in 1938, there wasn't a lot of money around. Because of this, mortgage rates were very low, as low as even 3%. In the '40s mortgage rates stayed low in part because during wartime most of the economy was regulated and buying a house was very difficult. So, there wasn't a lot of demand for mortgage money.
So what do we expect to happen in the future. The general feeling among mortgage brokers is that lenders are unlikely to return to the free wheeling style we saw in 2006. But at the same time its likely that the current extreme restrictions in lending might ease up some over the next six months.
Article Source: Articlelogy.com
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