The financial crisis in Europe has had the unexpected effect of pushing mortgage rates in the United States to record lows.
The average cost of a 30-year fixed-rate mortgage fell to 4.96%, and the average rate for a 15-year, fixed-rate loan dropped to 4.34% in Bankrate’s most recent survey of major lenders.
Those are the cheapest they’ve ever been since the survey began in 1985.
As a result, you can find lenders such as AimLoan.com offering 30-year fixed-rate mortgages for as little as 4.625%, and 15-year loans for 4.00%, with no points.
Home loans were expected to become more costly this spring after the Federal Reserve ended its campaign to flood the mortgage market with money.
But worries that several European nations might default on their loans have created a new financial crisis and sent investors fleeing for the safety of Treasury bills or other debt guaranteed by the U.S. government.
That includes mortgages, since 96% of all new home loans are now backed in some way by an agency of the federal government.
The surge in demand has actually pushed interest rates down since the Fed bought the last of the $1.25 trillion worth of home loans it now holds in late March.
Principal and interest payments would be just $514 a month for each $100,000 borrowed with AimLoan’s 30-year mortgage, and $740 a month with its 15-year mortgage.
With rates that low, you may be able to afford the payments needed to pay off your home in half the time.
Use this mortgage comparison calculator to see how much interest you could save by paying your home off more quickly.
The online lender based in San Diego, Calif., is licensed to write mortgages in 45 states (the exceptions are New York, New Jersey, Nevada, Kansas, or Pennsylvania).
To qualify you’ll need a credit score of 700 or higher. You must also be applying for a conforming loan — one for less than $417,000 to $729,500, depending on where you live.