• The U.S. mortgage rates continue to fall.  The meager mortgage rates might encourage more people to buy homes.

• The average rate for a 30-year fixed-rate mortgage dropped to 3.51% from 3.60% last week

• The average rate on a 15-year mortgage dropped to 3% from 3.04% last week.

• Low-interest rates are encouraging would-be homebuyers to take action. However, starter home has been scarce. The median listing price in the United States is $282,000, according to Zillow

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The U.S. mortgage rates continue to fall.  The meager mortgage rates might encourage more people to buy homes.  The Federal Reserve announced on Wednesday that it would leave the Fed’s benchmark federal-fund rate unchanged.  The rate is in a range of 1.50% to 1.75%  

The Fed’s benchmark federal-fund rate affects all lending and borrowings, including mortgage, although not directly.

Current Mortgage Rates

Here are the current mortgage rates according to Mortgage buyer Freddie Mac: 

1. The average rate for a 30-year fixed-rate mortgage dropped to 3.51% from 3.60% last week
2. The average rate on a 15-year mortgage dropped to 3% from 3.04% last week.
3. The average rate for a five-year adjustable-rate mortgage declined to 3.24% from 3.28% last week.

There are only 27 basis points difference between the 30-year fixed-rate mortgage and the 5-year ARM.  Even homebuyers who are not buying their forever-home need to consider the 30-year fixed-rate mortgage.  

Rates, Credit Score, & Point

Homebuyers with stellar credit scores and a sizable down payment, usually 20% or more, can get the average rate with zero fees or points.  Homebuyers often pay extra fees or points to get the lowest rates.

Here are the points lenders are charging according to Mortgage buyer Freddie Mac:

1. The average fee on both 30-year fixed-rate and 15-year fixed rates mortgages declined to 0.7 points from 0.8 points last week.
2. The fee on 5-year ARM was unchanged at 0.3 point

Lenders charge the extra fee on the purchased price.  A homeowner who bought a home for $300,000 at the 30-year fixed-rate mortgage would pay an additional $2,400. 

The Challenges

According to the Mortgage Bankers Association, the total mortgage application volume skyrocketed to 30.2% last week from the previous one.  Low-interest rates are encouraging would-be homebuyers to take action. However, starter home has been scarce. The median listing price in the United States is $282,000, according to Zillow.