Low interest rates have increased home purchasing power

Written by Posted On Monday, 05 January 2015 13:27

Mortgage rates have continued to fall as the new year starts, with 20-month lows at 3.87 percent for 30-year conventional mortgages according to Freddie Mac. This is the seventh week in a row for rates below 4 percent. Rates for 15-year, VA and FHA mortgages are even lower, which is good news for home buyers and homeowners looking to refinance.

Home prices have risen over the last few months, but continued low rates means that homes are still affordable, and buyers’ purchasing power remains strong. Lenders are also approving more loans today than they were a year ago, with current approval rates at 66.5 percent according to Ellie Mae. The average FICO score for approved mortgages is also lower, at 729 compared to 738 last year.

Job growth in 2014 was well over 2.5 million new jobs. Wages are rising as well, which is good for the economy, but can cause inflation. Mortgage rates may rise very soon in reaction to inflation rates, which have been too low for the past few years. As mortgage rates can change multiple times a day, it is always a good idea to lock in a low rate as soon as you can. 

Many home buyers are now moving to jumbo loans, which offer loan amounts higher than traditional home loans, and require just 10 percent down. Jumbo mortgages at loanDepot have limits of up to $2 million, with competitive rates and minimal costs, allowing you to get the home you want without spending too much money.

If you want to learn more about jumbo loans and whether it is the right type of mortgage for you, talk to a lender today. It is easy to compare rates online, and you could potentially be saving thousands over the life of your loan.

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