How Mortgage Rates Plunging Yesterday Changes Everything Today

Yesterday the Federal Reserve announced a $500 billion commitment to purchase mortgage back securities (MBS) and a $100 billion commitment to purchase debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. This infusion of capital into the mortgage market caused the average 30-year mortgage rates to drop to the lowest rates in years.

Mortgage Rates

I have seen estimates that 30-year mortgage rates will be at 5.5% today and BestInfo, Inc., a Dover, Vermont-based mortgage data company, predicted today's rate would be 4.875%.

Current Mortgage Rates Have Huge Impact On Home Values

To fully appreciate what this mortgage rate drop means to a typical Tallahassee family, let's take a look at how the payment on a 30-year mortgage of $200,000 changes with different mortgage rates:

Description Rate Monthly Payment 6 Years Payments
Historical Rate 9.000% ($1,609.25) ($115,865.66)
Mid November Rate 6.200% ($1,224.94) ($88,195.53)
BankRate 5.500% ($1,135.58) ($81,761.62)
BestInfo 4.875% ($1,058.42) ($76,205.98)

As you can see, the rate drop (using the rate from Bestinfo) could change total mortgage payments on a $200,000 loan by over $12,000 in just six years. Additionally, look what would happen if rates went back up to their traditional levels (9%), an increase of nearly $30,000 over the same 6 years.

Low Mortgage Rates Will Bring More Refinancing And More Home Sales

The reason that the Fed made this move on mortgage rates was to stimulate the mortgage market by purchasing the securities issued by Fannie etc. which in turn use proceeds to buy mortgages for themselves or make loans to banks. This will provide the market with liquidity after several tumultuous months.

The last time mortgage rates plunged (January 2008), we saw rates hit 5.5% but literally jumped back up into the 6's before the end of the same day. If you are thinking about a new loan, call your mortgage lender first-thing this morning and find out what they have to say about low mortgage rates!

Subscribe in a reader Subscribe by email

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible. Additionally, if you would like to respond (leave a comment) to this article, you will need to “click through” to the blog site to post your feedback.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed, or you can Subscribe by Email.You will be able to stay informed about the happenings in the Tallahassee Real Estate Market.
Joe Manausa is a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings about real estate and mortgage rates on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.
Mortgage Rates Mortgage Rates Mortgage Rates
View Joe Manausa's profile on LinkedIn

Please Do Us A Small Favor

We work very hard to produce daily content for our long-time readers and first-time visitors. We provide this information for free, hoping to earn your respect and trust and the right to one-day help you when selling or buying a home. Can we get your help spreading the word about our blog?

If you like the content, would you please like it or share it using the Facebook button at the beginning of the post? This simple action will be greatly appreciated! THANK YOU!

Please Like Us And Share On Facebook - Help us grow our brand!

Also like us on Facebook at

Joe Wrote The Book On How To Sell A Home Today

Joe Manausa wrote the book on how to sell a home in the digital age, you can find it hereWARNING: The Internet & digital marketing systems have changed the way sellers need to market a home for sale. It's not about getting a home sold anymore, it's about getting a home sold and netting the most money from the sale.

To do this, a seller needs to hit the digital market hard in a coordinated effort that alerts ready-buyers (all at the same time) to ensure buyers understand they are competing for the right to buy the home.

While it only takes ONE buyer to sell a home, it takes MULTIPLE BUYERS for the seller to bid the property up to its highest value in today's market. You see our full explanation about how to sell a house here, or you can buy the book and really get into the nuts and bolts of selling a home in the digital age.

Get the book that explains it all, in a manner that is understanding to all, even technology neophytes. It's available on Amazon, a trusted source for consumers.

Real Estate Agent reveals in Tallahassee, Florida

Think all REALTORS are alike?

Read what people are saying about working with Joe Manausa Real Estate! You can see thousands of real customer reviews reported on Google, Facebook and Zillow at this link: CLICK HERE FOR REAL ESTATE AGENT REVIEWS.

Post a Comment

(850) 378-5727