December 16, 2011- This week the rates for mortgages dropped to record lows. The average 20-year fixed mortgage rate fell to just 3.94%. That matched the lowest all time rate from October of this year. The rate for a 15-year fixed mortgage dropped to a new low of 3.21% that passed a previous low set from October 6 of this year.
Adjustable rate mortgages for five-year terms fell to new lows for the week at just 2.86%. According to analysts, the low mortgage rates will be available at least until the middle of 2012.
Low interest rates can produce big savings for those buying homes. Just five years earlier, it was hard to find a rate of 5% for a 15-year mortgage. For a mortgage of $200,000, the month payment would have been $1,582 for that 5% rate.
If a homebuyer were to receive a rate of 3.2% today on that same $200,000, their monthly mortgage payment would be $1,400 or $182 less each month nearly a $2,200 savings each year.
Applications for mortgages increased last week by 4% as many homeowners are attempting to refinance their existing mortgages to take advantage of the record low interest rates. Nearly 80% of the loan applications that were received last week across the United States were for refinancing.