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Mortgage Rates Fall In Line with All Time Lows




The most frequently quoted top tier rates are as low today as they've ever been. While they're slightly more expensive in terms of closing costs, the net effect is a great deal with 30 year fixed rate down to 3.875 percent.

When it comes to all time low mortgage rates, a bit of clarification is in order. Earlier this Fall, especially near the end of September and beginning of October, there were several days where rates, on average, were lower than they are today.

But in terms of the actual interest rate that's most likely to be quoted to an ideal-scenario borrower, it was 3.875 percent then and after a long time stuck at 4 percent, the most prevalent best-execution rate is once again 3.875 percent.

There are a couple things to keep in mind when thinking about a 3.875 percent Best-Execution rate. First of all, if you're not familiar with our rate disclaimer that we link at the bottom of every RateWatch post, it's important. Here it is, as a refresher, in case you missed the link at the bottom:

Best Execution is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125 percent. When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage.

In other words, 3.875 percent Best-Execution rates mean that this the most prevalent rate for the best qualified scenarios. While it considers the costs involved to obtain that rate, those costs can vary quite a bit before a move up to 4 percent or move down to 3.75 percent would be justified. We're only just entering the outer limits of the 3.875 percent range of closing costs (on average, some lenders are already close to 3.75, some are still at 4.0 or higher). 

As our curiosity perks up due to discussion of all time low rates, it's a good time to step back and assess what that really means. It's not that we haven't been here before, and it's not a guarantee that you'll be quoted a lower rate today than you have been in the past. 

– Courtesy of Mortgage News Daily


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December 14, 2019, 8:05 am PDT

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