Mortgage Rates During the Past 10 Years: Is There a Big Difference?

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Interest Rates

Interest Rates (Photo credit: 401(K) 2012)

There are various types of mortgage loans and the type of loan a person takes out will determine in large part how much interest he or she has to pay. Adjustable rate loans enable a person to pay the current market interest rate each month; fixed rate loans have a fixed interest rate that does not change no matter what happens in the real estate or overall financial market.

No matter what type of mortgage loan a person looks at, it is plain to see that interest rates for mortgage loans have fluctuated a lot over the last ten years. At certain times, the rate has been about the same as it is today. Most of the time, however, it has been significantly higher. Following is an overview of mortgage rate fluctuation, which provides a good comparison to today’s present interest rates.

Adjustable Rate Mortgages

In January 2003, the ARM rate was 3.86. The rates declined slightly up until March 2004, at which time they started to rise exponentially, reaching as much as 5.63 at one point. Then, from January 2009 onward, the rate started its steady decline. It now stands at 2.57, which is the lowest it has ever been over the last decade.

Fixed Rate Mortgages

Fixed Rate interest rates fluctuated wildly in 2003 and 2004. The rates changed every few months and in some cases rose or fell by nearly two points. The rates started going up in January 2005 and kept going up for the most part up until January 2009. Since this time, the rate has been steadily declining for the most part. Rates rose once, in March 2011, but started falling again just one month later. From this time onward, the rate has continued to decline, reaching a record low of about 2.6%.

What Does  This Mean?

What is very clear from the information is the fact that mortgage rates can change quickly and without notice. However, at present they are on a steady decline. This means that it really is a buyer’s market when it comes to investing in one or more properties. The record low in interest rates also means that refinancing a mortgage loan could potentially help a homeowner save hundreds or even thousands of dollars a year.

Interest rates have played a big role in the real estate market. Luxury real estate investors , along with average homeowner hopefuls, look at interest rates to determine when to buy a home or apply for a refinanced mortgage loan. It is naturally impossible to predict future interest rates with 100% certainty, but looking at trends over the last decade makes it clear that present interest rates are at a record low. Furthermore, industry experts are already stating that the odds of getting rates this low in the future are slim.