4.25% 30 Year Fixed Rate
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Program Rate APR
30-Yr fixed 4.750 % 0.7 to 1
15-Yr fixed 3.750 % 0.7 to 1
5/1 ARM 3.125 % 0.7 to 1
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Record Low Mortgage Rates

In the week ending September 1, 2011, mortgage rates fell across the board, hitting all-new record lows. As of September 2, 2011, according to Mortgage News Daily, 30-year fixed-rate loans fell to 4.14 percent and 15-year fixed-rate loans fell to 3.51 percent. Current mortgage rates have blasted downwards, past the lows set in 2010. The Federal Reserve’s second round of quantitative easing sparked a broad rise in interest rates throughout the economy before economic woes set in, driving them back down. The lowest in history, 30-year loans are setting records, giving homeowners an incentive to refinance their current mortgage rates and lower monthly payments.

The refinancing “boom” is proceeding at an odd pace, in fits and starts instead of a sustained, continuous rise. As interest rates fall even further and make new lows, new waves of refinancing activity appear. Homeowners are obviously waiting for interest rates to fall even further before they risk entering the refinancing process. Locking current refinance mortgage rates in at these extremely low levels may be enough to offset the costs of resetting the amortization schedule. Refinancing only works if the total cost to the homeowner over the long run is lower than the total cumulative amount of money saved by lowering the monthly payment.

The forecast for current refinance mortgage rates is for them to remain low or go even lower, eking out whatever new records they can reach. Interest rates throughout the economy are linked to two things: the Federal Funds Rate and the yields on Treasury securities. The 30-year rate, in particular, tends to track the 10-year Treasury note. This may seem strange since the maturity dates are so far apart, but the average length of time for a 30-year mortgage is actually seven years. This is because homeowners refinance their homes or move before the full 30 years have passed.

The Federal Reserve pledged to hold the Federal Funds Rate at its current level of effectively zero percent for a further two years last month. The yields on Treasury securities have hit record lows themselves, and they are still falling. The 10-year Treasury note yield went below two percent for the first time in history in August, and it is currently trading below two percent as of September 6. This portends even lower rates on the 30-year loan, and by extension, on the 15-year loan as well, since the yield on the comparable Treasury security for that loan is even lower than the 10-year.