Freddie Mac reports the average 30-year fixed rate mortgage rate at 3.71% for borrowers willing to pay 0.7 discount points plus accompanying closing costs.
It's the second-lowest reading in Freddie Mac's recorded history and, as a point of comparison, one year ago, the 30-year fixed rate mortgage averaged 4.50% nationwide.
A homeowner giving a $200,000 mortgage at last year's 4.50% rate would have paid $1,013 monthly for principal + interest. Today, that same homeowner pays just $922 per month -- nine percent less.
Mortgage rates may drop even more this week.
Sunday, in Greece's bid to re-elect a government, a pro-bailout party won the most votes in a highly-watched election, dampening fears that Greece may leave the European Union. However, the winning party must still form a new government and it beat the "anti-bailout" party by just 3 points -- 30% to 27%. Some analysts question whether Greece can form a coalition government within its required 3-day window.
If Greece fails to form a government, the nation-state's future in the European Union will, again, be in doubt -- a potentially positive development for U.S. mortgage rates.
Also this week, the Federal Open Market Committee meets for its fourth scheduled meeting of the year, a two-day event beginning Wednesday. The FOMC doesn't set mortgage rates, but it does set U.S. monetary policy which can have an effect on mortgage rates. If the Federal Reserve votes to add new stimulus, mortgage rates may rise on concerns for inflation.
The FOMC is not expected to add new stimulus.
And, lastly, this week will see the release of several housing reports including the homebuilder confidence survey, the Existing Home Sales report, and the Housing Starts report. Strength in housing may be viewed as a plus for the economy, which can cause mortgage rates to rise.
Expect volatility this week as mortgage markets wrestle with events at home and abroad. This may be aprudent time to lock a floating mortgage rate.
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