Never before have home buyers been able to lock in such low mortgage interest rates, which sets up 2012/2013 home buyers to have ultra-low housing costs on into the future.  For the past six months, most home buyers have been able to lock in 30-year fixed mortgage interest rates between 3.3% and 3.6%.  Over the past four decades (since Freddie Mac started tracking this data) the average U.S. interest has never been this low --- in fact, this average mortgage interest rate had never dipped below 4.0% until October 2012.

To put today's low mortgage interest rates in perspective, a home buyer financing 80% of their purchase at the most recent average rate (3.41%) would have a monthly payment (principal and interest only) of $622.  Just one year ago, the average rate was 3.90%, which would have resulted in a monthly payment of $660, and two years ago the average rate was 4.91%, which equates to a $744 payment each month.  As can be seen, locking in a mortgage interest rate today can create tremendous monthly savings for years into the future.

Not only do today's home buyers have the unique opportunity to lock in a low interest rate, they are also potentially buying at the lowest housing prices that we will see for many years to come.  Local home values increased quickly between 2003 and 2006, with a 51% increase in median price over a three year period.  Since that time, home values have been slowly declining, showing an overall 9% decline between 2006 and 2012.  Home values now appear to have stabilized, with annualized median sales prices steady for the past 23 months.  We are likely to see home prices slowly start to improve again over the coming years.

The lowest mortgage interest rates ever combined with the lowest home prices that we are likely to see over the next 5-10 years create a unique opportunity for buyers who are willing and able to act now to buy a home.  The first steps in taking advantage of this opportunity should include talking to a local mortgage lender to become preapproved for a mortgage, and talking to a Realtor about what you are looking for in a new home.

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Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com