Before taking out a mortgage, checking its cost that includes closing cost as well as interest rate is of the utmost importance. Mortgage rates are not a constant, they change every week and you have to pay extra attention to these trends if you are looking for a mortgage lender for yourself. You might ask yourself ‘to what extent these trends vary?’ The answer is elaborated below.
A closer inspection of these mortgage rates has shown us that it has a difference of around 1.25%. For instance, a lender who had the lowest rate for mortgage didn’t exceed 3.8% while the highest mortgage rate offered by another one was 5.25%. Keep in mind that these rates are for a 30-year old loan plan.
Now in order to know what this implies, we will find the difference between these two mortgages’ monthly costs.
Just pick any two mortgage lenders with varying mortgage rates and subtract the lowest rate mortgage’s monthly cost from the highest one. The one we had chosen gave us a difference of $456 which means that you could have this much money if you had looked around more for the lowest rate.
We’ve made a short list of average mortgage rates considering different loan types along with the weekly fluctuations. The list is as follows:
- For a 30-year fixed loan type, the average rate is 4.34%. The weekly change that we’ve observed for this loan type is –0.02%
- For a 15-year fixed loan type, the average rate that we’ve observed is 3.84% and the estimated weekly fluctuation is –0.01%
- The average rate for a 5/1 adjustable-rate mortgage (ARM) is 3.80% and the weekly change in its rates is –0.02%
It is important to know that these rates are for a $200,000 loan over which 20% of the down payment was required.
Until now, we haven’t discussed the mortgage rates offered by the banks. Here is a quick overview of rates offered by California’s leading banks.
Mortgage Rates Offered by Banks:
Wells Fargo is one the most popular banks that has originated the highest mortgages over the past five years. It offers a mortgage rate of 4.88%.
Going head on with the Wells Fargo, U.S bank offers the same rate of the 4.88%.
Another popular mortgage lender is Chase bank as it offers 5.00% mortgage rate making it the highest rate.
Following close behind Wells Fargo and U.S bank is Citibank with 4.63% of rate. Bank of America and Cathy Bank come right after Citibank with 4.50% and 3.88% home loan rates.
It is important to keep in mind that these rates change weekly and sometimes daily as well as different banks are bound to offer different mortgage rates.
You might want to know the answer of a simple question and that must be are mortgage rates declining or increasing in California?
To explain this dilemma, here is a detailed observation so far.
According to The Federal Reserve’s Open Market Committee (FOMC), it is essential that we rely on numbers and data to predict these trends and for now they prefer to observe rather than predict. But the most we’ve gotten out of them is that mortgage rates in fact won’t be increasing that much in 2019 compared to 2018. This will be contradictory to what experts have predicted before.
This prediction is linked to the target federal fund rates which determine a bank’s interest rate which in return affects its mortgage rate. There might be some exceptions due to deviations in the credit scores, consumer demand and mortgage originations.
Mortgage Rates According to Area:
It is no secret that mortgage rates differ according to the area. Metro areas tend to have higher rates. It is necessary to note that there is not much difference in the rates of all these metro areas. Furthermore, the one thing that is responsible for fluctuation of these mortgage rates is the price of the house. It plays a bigger role than you can imagine.
High Prices of Houses in California:
We’ve just established that a house’s pricing affects its mortgage rate immensely. Keeping that in mind, you will be unhappy to know that house prices in California are quite high.
Although the fact that there isn’t much risk of seeing an increased mortgage rate in California in 2019 is reassuring, the high pricing of the houses does make you tread these waters carefully.
Searching for the lowest mortgage holds significant importance if you want to be stress-free while paying your debt.