The 3 percent rate is lowest seen in his forty years in the industry
San Francisco, CA -- (SBWIRE) -- 12/31/2012 -- According to Henry Cook, the the recent moves in banking have been unprecedented. Fueled by aggressive buyout from central banks in the U.S., mortgage rates have fallen to historic lows. The Somerset Trust's president stated that in fact this means it has never been so cheap to buy or refinance homes.
Cook stated that a typical rate on a 15-year term in 3% interest, and he cannot recall a time where numbers were lower than 5% in the past few years.
“It knocks me over,” he said.
The lowered rates are a direct result of the Federal Reserve deciding that it must spend $40 billion each month on mortgage bonds, which started in September. For new and existing homeowners that possess quality credit, it means a chance to save tens of thousands of dollars during their loan term.
Lowered rates also have been a sign that the economy has not fully turned a corner, despite somewhat positive numbers as of late.
Cook states that mild fluctuations are not uncommon and should be expected. He states that rates were below 8% when he began in the industry in the early 1970s. By the 1980s, a 15% rate was considered a quality deal. Those numbers dropped again to 7% through the 1990s. At the turn of the century, a 6% was acceptable.
"It's a wacky thing," he said of the current rates. "It is specifically targeted at first-home mortgages. The interest rate yield on the bond has been pushed lower and lower and lower."
It is not only new financiers of homes, but existing homeowners can also benefit from the lowered rates.
Cook cited a recent example wherein an individual saved $120,000 over the mortgage term by refinancing. "We're talking some very serious money here," he said.
Homeowners can lock into a new agreement with new rates, then choose to lower their monthly payment or keep payments at the current level to pay off the home faster.
Cook believes the local business of mortgaging is seeing a boost due to the attractive nature of these options.
"We're out there (spreading the word) — we're working very hard at this," he said. "That would mean there's more money in every (homeowner's) pocket."
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