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September 2010
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2010 the Summer of Records for Mortgage Rate Lows

It seemed like every week this summer the mortgage interest rate records were broken with new lows. Conforming, VA and FHA mortgage rates all glimmered at 40-year lows. But even as a glut of unsold inventory keeps the housing market from recovering, nearly a third of Americans can’t qualify for home mortgages, according to new data from online real estate search company Zillow.

Home Loan Rates Starting at 4.25%

Potenetial homeowners with credit scores below 620 points were largely unable to take out thirty-year home loans in the first half of September, even if they offered down payments as high as 25 %, Zillow found after analyzing more than 25,000 loan quotes and purchase requests on its website. A full 29.3% of Americans have a credit score that low, Zillow says, citing data from myFICO. The time to compare mortgage rates has arrived, so don’t miss this opportunity.

Mortgage interest rates, meanwhile, are at a levels not seen since Freddie Mac started recording interest rates in 1971. According to data compiled by the Federal Reserve the average mortgage rate on a thirty-year mortgage was 4.37% as of September 16th. The St. Louis Fed has data going back to 1971 and, in that period, before 2009, the interest rate never fallen below 5%.

These days, according to Zillow, the lowest home loan rates remain at 4.25%, available only to those with a credit score above 720 points about 47% of Americans. The higher rates, ranging from 4.44 to 4.9%, are available to about 23.8% of Americans. The remaining 29.3% of the United States cannot get approved for home mortgage loans at all.

A variety of factors, including a high volume of foreclosures and weak demand, have depressed the housing market to such an extent that some experts say it won’t rebound for three years. But mortgage lenders are understandably cautious. While easily accessible home loans might contribute to a housing recovery, lenders are still shell-shocked from the aftermath of the housing bubble. Banks have been writing off debt in record numbers, the charge-off rate this year has been higher than any year since at least 1988, according to data from the Saint Louis Fed.