For the first time in history, mortgage interest rates have dropped below 4 percent, Freddie Mac reported Thursday. The rate is now 3.94 percent for a 30-year fixed home loan with an average 0.8 point for the week ending Oct. 6, down from last week’s historical low of 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.
Could this number finally represent a tipping point for would-be borrowers who fell just shy of being able to afford to buy a home? “Absolutely,” says Diana Weir, executive vice president of the Long Island Housing Partnership, a nonprofit that counsels home buyers. “Your dollar can buy more, and that will help offset some of the high taxes,” she says.
Qualifying for a home loan is still a challenge for many, but low rates create new possibilities for some. “This will open the door for a lot of new purchasers,” Weir says. “If you’re working and have good credit, now’s the time to go out and shop and go for it,” she says.
The 15-year fixed-rate mortgage this week averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.72 percent.
The average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage was 2.96 percent this week, with an average 0.6 point, down from 3.02 percent last week and 3.47 percent a year ago. The one-year Treasury-indexed adjustable-rate loan averaged 2.95 percent this week with an average 0.5 point, up from last week when it averaged 2.83 percent. At this time last year, the 1one-year ARM averaged 3.40 percent.