The 30-year fixed rate mortgage dropped to 5.68 percent from 5.87 percent a week earlier, while the 15-year fixed rate mortgage plunged from 5.19 percent to 5.01 percent Jan. 15. This dramatic drop in interest rates broke records, as they haven’t dropped to levels this low since July 9, 2003, causing this week’s rate decrease to leave rates at six-month record lows.
What caused the dramatic drop in rates? Most believe that the main reason is the jobless recovery, meaning that, while American economic productivity has increased, fewer jobs than normal have been added to American job rolls, forcing many to remain unemployed.
BankRate.com’s Greg McBride told RisMedia.com, “A job hunter’s misery is a mortgage hunter’s glory.” It’s hard to argue with that, given that rates continue to remain in the 5 percent range. The low rates allow potential home buyers to potentially spend more on a home than they would be able to, say, if rates were 7 percent or higher.
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