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Rates Come Back Down, Bringing Consumers Off the Fence

  • July 15th 2009

by Will Smith

For those kicking themselves for not locking in a mortgage rate a few months ago when rates dipped below 5 percent, last week’s big drop in rates might be a lucky second chance. They are still not as low as they were, but at just above 5 percent they are extremely low by any standard.

The dip in rates encouraged a lot of consumers last week to pull the trigger on securing a loan or refinancing, according to the Mortgage Bankers Association, which releases a weekly report on mortgage application volume. Refinancing activity in particular was up, popping almost 18 percent week-over-week.

MBA noted that the average rate for a 30-year fixed-rate mortgage dropped from 5.34 percent the week before last to 5.05 last week. To understand how much of a difference that can make to your personal finances, take a look at the table below which compares the monthly payments at both rates for various mortgage amounts:

MortgagePayment/month
at 5.05%		Payment/month
at 5.34%		Monthly
difference
$200,000$1,080$1,116$36
$300,000$1,620$1,673$53
$400,000$2,160$2,231$71
$500,000$2,699$2,789$90

This article originally published at https://dc.urbanturf.com/articles/blog/rates_come_back_down_bringing_consumers_off_the_fence/1136.

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