BLOOMINGTON — Mortgage rates across the country are as low as they’ve been in decades, according to major mortgage buyer Freddie Mac, and local lenders and real estate agents said the rates are spurring home buying.
Freddie Mac reported Thursday the average rate for a 15-year fixed mortgage slipped to 2.56 percent, the lowest on record dating to 1991. It fell from 2.61 percent last week, the previous record. The rate on the 30-year loan fell to 3.35 percent from 3.40 percent last week. It’s just above November’s rate of 3.31 percent, the lowest rate since 1971.
Bob Lakin, president of Commerce Bank in Bloomington, said mortgage rates have gone down because central banks across the world are adding currency to try and bolster their economies in the wake of recession. He said it is unlikely rates will continue to fall the way they have been.
“With this much cash available around the world, and the lack of considerable projects sopping it up, it’s a flood of money,” Lakin said. “The lack of demand for all this money is driving rates considerably lower.”
Thom Jones, a broker with Prudential Snyder Real Estate and president of the Bloomington-Normal Realtors Association, said the low rates are encouraging people to buy homes.
While Jones said home prices are recovering, he sees a short-age of existing homes on the market. In the Twin City area, Jones said there are 950 existing homes available, down from a normal level of about 1,200. At the same time, he said that’s unlikely to affect sales outlook.
“We’re taking them off as fast as we’re putting on new inventory,” Jones said. “We’re optimistic that sales will continue to improve.”
Lakin said if a homeowner can afford it, now is a good time to refinance from a 30-year to a 15-year home loan.
“If you can afford the payments (on a 15-year mortgage), you save a fortune of interest over the time period, not only because it’s across 15 years, but because the rate is so fundamentally low,” he said.
David Stokes, a financial advisor with Edward Jones Financial in Bloomington, added that it’s not unusual to get a 15-year rate that’s 1 per-cent lower than a 30-year rate.
“For every $100,000 you have (mortgaged), that’s $1,000 in your pocket you have to spend on something else,” Stokes said.
But those whose homes have declined in value, those with credit scores that prevent them from getting a favorable rate, or those still paying private mortgage insurance may want to hold off until their situation changes.
“I would caution people,” Stokes said. “There’s no harm in checking your options. Go to a mortgage lender, they can run a credit report for you, and you’ll know where you stand.”