(Credit: Image by 401(K) 2012)
Mortgage loans come in multiple forms, each with factors that shape the final total of interest required for repayment. For instance, adjustable rate loans oscillate with market interest rates, whereas fixed-rate loans sustain a steady interest rate unaffected by the property or broader financial market shifts.
It’s important to note the volatility of mortgage interest rates over the past decade, with occasional parallels to present-day values, but often much higher. A brief overview of the fluctuations in adjustable and fixed-rate mortgage will demonstrate how the current rates compare.
Adjustable Rate Mortgages
In January 2003, the Adjustable Rate Mortgage (ARM) set off at 3.86. These rates saw modest declines up till March 2004, where they saw a sharp incline, soaring to as high as 5.63 in some instances. Post-January 2009, however, a steady descent set in, settling today at an all-time low of 2.57 over the decade.
Fixed Rate Mortgages
In 2003 and 2004, fixed rate mortgages experienced notable instability, with rates fluctuating significantly every few months. The surge began in January 2005 and retained a progressive trend until January 2009. Post this date, the rates generally tapered down. A brief surge occurred in March 2011, but the rates resumed their decline only a month later. Today, the rates hover at a record low of approximately 2.6%.
Implications?
The primary takeaway is the unstable and unpredictable nature of mortgage rates. Despite the fluctuations, current rates are noticeably in decline. This situation advocates for a buyers’ market, suggesting profitable investments in one or more properties. The record low rates also present potential savings opportunities for homeowners considering mortgage refinancing.
Interest rates significantly influence real estate decisions. All kinds of investors and prospective homeowners monitor these rates to time property purchases or refinancing applications optimally. Although predicting future rates with absolute certainty isn’t feasible, trend analyses from the past decade distinctly place current rates at record lows. Industry specialists also predict that attaining such low rates in the future is highly unlikely.
