Mortgage rates fall for the week of June 23, 2014

Posted by  on Jun 30, 2014

With continuing uncertainty in Syria, Iraq and Ukraine, and economic recovery only slowly gaining traction in much of Europe, investors are looking for safe places for their money. And right now, your home loan looks safer than most. It's that good supply of lending money that's keeping mortgage rates low.

Mortgage rates mostly moving down

This week, they're generally down again, with those for 30-year fixed-rate mortgages (FRMs) -- by far the most popular choice -- falling on average two basis points (0.02 percent) to 4.22 percent from 4.24 percent, according to HSH.com. Leaving aside an anomalous three-week period around the end of May, this is the lowest this rate has been in a year. This week, points for these tumbled to 0.12 from 0.16, driving down closing costs as well.

The average rate for 15-year FRMs also dropped, to 3.45 percent from 3.48 percent, another 12-month low, leaving out those anomalous three weeks. Points for these fell slightly to 0.09 from 0.10. Some adjustable-rate mortgages (ARMs) fared less well, with the average rate for a 30-year 1/1 ARM (that 1/1 means the rate is fixed for one year, and can be changed every one year after that) rising to 2.75 percent from 2.70 percent, with points holding steady at 0.10.

All these are, of course, national averages, and our live database of current mortgage rates can help you find the best mortgage rates in your area.

Buying and budgeting

If you're irritated by weather forecasters getting their predictions wrong so often, you must really hate people who pretend to know what's going to happen to mortgage rates. Meteorology is a way more exact science than economics, and nobody has much of a clue what's going to happen to rates tomorrow, let alone further ahead, although most experts believe they're bound to go up sometime.

This makes deciding when to buy a home or refinance very difficult. One day, you just have to take the plunge and hope for the best. As you choose when to do that, remember that your main goal should be to maintain your ability to afford your home comfortably. And mortgage rates are only one of three factors that influence that (your income and the price you pay are the other two). There's no point waiting in the hope of shaving a few basis points off your mortgage rate, if home prices are rising rapidly and your salary's stagnant. We're probably not in that position yet, although the National Association of Realtors reports that the median price for existing single-family homes climbed by $13,200 in the first three months of this year, to $201,100 in April from $187,900 in January.

So keep an eye on house price trends when you're deciding when to buy. And bear in mind your own prospects: If there's a significant raise in the offing, you may be able to afford a nicer home if you wait. At the same time, use our mortgage calculators to model different home-price and rate scenarios, and see what works for your household budget.


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