Mortgage Rates Reach a Six-Month Bottom


Despite the predictions for a dramatic increase of the mortgage rates in 2014, they are displaying a downward trend. In fact, they are falling below the levels from the end of 2013. This is highly beneficial for all prospect home buyers, especially during the traditionally busy spring house sales season, but is this trend going to remain?

The average rate on a 30-year fixed mortgage during the week ending May 16th was 4.2%. The drop of 0.01% from the previous week was not very significant, but it helped the rate to reach its lowest point in 6 months. The drop in the rate of 15-year fixed home loans was more significant. It reached 3.29% while it was 3.32% the week before. Borrowers willing to accept higher risk could secure 3.01% rate on adjustable rate mortgages with an initial fixed-rate period of 5 years. For comparison, during the previous week of May this rate was 3.05%.

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The considerable drop in the mortgage rates was created by the growing demand in the mortgage bond market. As bond prices increased, this produced a negative impact on the rates. The downward trend may remain for some time given the movements in the global financial markets, but the rates are likely to go back up after the mortgage bond market calms. The experts’ opinion is that we can expect an increase in the coming months, but it will not be significant.

Home buyers with low debt-to-income ratio and good credit score are fully capable of exploiting the drop in the mortgage rates. Applicants with very high credit score may be able to secure a fixed rate even below 4% as long as they make a down payment of 20% or larger. The same applies to home owners who would like to refinance. They will be able to access the best opportunities with home equity exceeding 20% of the property value.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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