Mortgage Rates Fall Below 5%, Again Reach 50 Year Lows

May 25th, 2010

Average mortgage rates are below 5%, making this a rare time in history for first-time homebuyers and those seeking to refinance to lock in a low interest mortgage loan. Although the homebuyer mortgage tax credit is a thing of the past, it is possible to end up saving much more than $8,500 in interest over the course of a loan by taking advantage of a low rate mortgage.

HSH has been tracking mortgage rates for decades, and they suggest:

“With rates this low, it's important to understand that rates can increase even faster than they have fallen. If you're prepared to either buy or refinance, don't balk at today's low mortgage rates thinking that they may fall significantly lower. They are unlikely to do so.”

How much will a rate increase influence your monthly payment? According to our Amortization Calculator, the difference in a monthly payment between a 5% and 5.5% interest rate on a $200,000 loan is $61.94. For the same loan amount, the monthly difference between a 5% and 6% interest rate is $125.46, making monthly payment amounts low enough to be able to fit in many homebuyer budgets.

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