30-Year Fixed Mortgage Rate Chart

Talk of the 30-year fixed mortgage rate falling back below 6% filled the airwaves yesterday, so below we provide a two-year chart of the rate for those that are interested. Even as the Fed Funds Rate has fallen from 5.5% to 1%, mortgage rates have failed to decline along with it, which hasn't done much to help the struggling housing market. Economists and investors are hoping that the Fed's actions yesterday will start pushing mortgage rates lower. This will help ease the credit crisis as banks will become more willing to lend, providing better interest rates for potential homebuyers. 5.81% is better than the 6.4% seen at the start of the month, but the rate could still stand to drop quite a bit.

click to enlarge

Comments

[msoori:]

Dropping the mortgage rates will definitely help the housing market, but how low will it go? Bankrate shows 5.6% for a 30 year Fixed and I'm getting e-mails from mortgage consultants claiming 5.375% for a 30 year Fixed FHA. I think it will have to drop a lot more to bring in those sitting on the fence.

2008 Nov 27 11:09 AM

[msoori:]

Dropping the interest rates will certainly help, but how low will it go? Bankrate is showing 5.76% for a 30 year fixed and I'm getting e-mails from mortgage consultants claiming 5.375% for a 30 year fixed FHA. I think the rates will have to drop a lot more to bring in new buyers.

2008 Nov 27 11:13 AM

[D. McHattie:]

Houses and condos are overpriced relative to incomes and rents. Mortgage rates have little relevance.

If the homebuyer lets mortgage rates affect the price they are willing to pay then they need to consider what mortgage rates will be when they sell also.

Rock-star status Yale economist Robert Shiller has shown that mortgage rates historically have little impact on home prices.

Good luck to all. Tell the truth.

2008 Nov 27 11:44 AM

[MudEngineer:]

If you think that mortgage rates have no effect on home prices, you must have slept through 2002 through 2006. Rates stayed too low for too long and home prices went up 50% or more to get back up to the 38% of adjusted gross incomes that supposedly people could afford and then prices stopped rising because even with a low rate, people could no longer afford to pay the needed mortgage on the more expensive homes. And then when rates started rising, the prices rolled over and started down again to revert back to long term average prices. Simple math works every time.

2008 Nov 27 12:39 PM

[evergreen16:]

Waiting for the magical 5% rate. Things suddenly become more affordable...

2008 Dec 01 12:45 PM

[Reality Che...:]

Mortgage interest rates are only one variable which affects increases and decreases housing prices.

Historically most other factors, except family income, were stable. Beginning 15 years ago those other variables started changing.

Number of Buyers willing and able to buy houses vs Number of Sellers willing and able to sell at prices buyers are willing and able to pay push prices up or down. Supply and demand is the simple name for this.

Interest rates ( and resulting monthly mortgage payments ) are one factor which affects the number of buyers willing and able to buy at any given price.

Other factors include lenders' willingness to loan money to any given buyer. Historically that has included an evaluation by the potential lender's of the buyer's ability to pay back a mortgage. It also included evaluating the potential buyers historic pattern of re-paying debt.

Over the last few years the number of buyers, and the demand, included a large percentage of buyers who historically would have never been offered a mortgage, let alone a no down payment mortgage.

Known in the industry as No Income No Job no Assets (NINJA) Mortgages. These were banks and mortgages brokers making these loans and then re-selling them to investors as Triple A rated investments.

Investors no longer trust Mortgage Brokers or Banks or Rating agencies - Wonder Why?

Even if investors trusted banks, 20% - 30%, of potential home buyers will no longer qualify - even with 4% to 5% Mortgage interest rates - so housing demand by willing and able buyers will continue to be down by 20% to 30%, minimum, which means continued sharp drops in the price of homes will continue over the next months and likely years.

2008 Dec 14 10:59 PM