The average 30-year mortgage rate will vary, but interest rates have dropped over the last few years due to several factors. Read on to learn more.
Are Interest Rates for 30-Year Fixed Loans Low?
The average rate in October for this type of loan was around 2.83%. But the question is – is that low? Well you can’t call something low unless you have something to compare it to. So in this case let’s compare it to the average from 2 years ago, October 2018. At that time, the average was around 4.83%.
Let’s use these numbers to compare two different scenarios:
Scenario 1: You bought a home two years ago. You borrowed $300,000 for the house and the rate was 4.83%. That means your monthly mortgage payment is around $1,579 (not including insurance or taxes.)
Scenario 2: You buy a house right now and lock in that rate of 2.83%. Borrowing the same $300,000, your monthly payment is now around $1,237.
What could you do with an extra $342 per month? That’s how much money you’d be saving if you bought a house right now due to the very low interest rates on this type of loan.
Are Rates Low on a 15-Year Fixed Rate Mortgage?
Let’s try this again. While 30-year loans are the most common, a lot of people like to take out a 15-year loan to pay off the principal faster.
How do today’s rates compare to that of the past? This time let’s look at three different scenarios.
Scenario 1: You borrow $300K for a house right now and get a 15-year mortgage. Your rate is the October average of 2.35%, so you’re paying around $1,979 per month.
Scenario 2: What if you borrowed the same $300K last October? The average rate then was around 3.15%, so you’re out $2,093 each month.
Scenario 3: If you’d borrowed the same amount in October 2010, your rate would be around 3.66% and your monthly payment would be about $2,168
Are the differences between these numbers huge? Not really – but it does show that today’s interest rates are low compared to the last few years.
Interest Rates are Low Everywhere
In general when interest rates are low for some loans, they’re low for all types of mortgages. That’s because they’re tied to the Fed’s interest rates, which will be low for a while.
That’s what makes right now a great time to buy. If you buy in the late fall or winter of 2020, here are the advantages you have:
- Competition is low, as you don’t have a lot of people out buying homes right now.
- Interest rates are low, saving you money.
- House values will keep going up, especially once COVID gets under control with vaccines.
If you’re thinking of buying a home soon, give us a call at (877) 556-2655 – we’d love to help finance your dream home.