Mortage Rates Dropping, Reaching Historic Lows

NJ Spotlight News | November 13, 2014
Mortgage rates have been dropping but analysts say that rates could begin to increase within the next year.

By Brenda Flanagan

She’s moving into the home of her dreams, but it took several months, three lenders and a lot of patience for Cathy Grant 
to finally get a mortgage on this house in Monroe Township. 

“I feel like we’re actually lucky at 
this point, but it was not easy,” said Grant. “The banks are very much shy of coming forward and make these things happen because of what’s happened in the past.”

But brokers like Brian LaRue of Red Oak Mortgage say, the market is finally easing up a bit.

“It’s a very well-kept secret right now. People are very surprised,” said LaRue.

He says, mortgage rates are at near-record lows and dropping. In New Jersey a 30-year
 fixed averages just 3.86 percent close to the national average. A 15-year fixed runs a shade above three percent in New Jersey
 and nationwide, while refi’s can trend higher — averaging close to four percent in New Jersey. The word’s spreading slowly.

“People aren’t really jumping on it because it’s not common knowledge. The market, it’s happening so 
slowly and it’s moving very slowly and no one really knows how long it’s gonna stay,” said LaRue.

Here’s the backstory: facing the burst housing bubble and Great Recession, the Fed eased interest rates — so-called Quantitative Easing phases 1, 2 and 3. Analysts think the Fed’s likely to raise rates early next year, and 
banks are gradually responding.

“Rules of the road when it comes to qualifying for a mortgage are good credit, proof of income, and either having money for a down-payment or having some equity in the home. If you got those three things, you’re in business,” said Bankrate Inc. Chief Financial Analyst Greg McBride.

But New Jersey’s economic recovery lags behind the nation’s and property values have rebounded slowly. That can create 
hurdles for homeowners.  Joe Vida managed to buy his home in Freehold — only after taking a bath to get out of his first house.

“Where we had to write a check to leave because value when we sold then — we were upside down on our house,” said Vida.

Worth it? He just got a 15-year fixed refi on his home. Cathy’s situation — her home back in Tinton Falls is still “under water” — 
she’d take a big hit if she sold it now. So she’s renting it out to cover that mortgage and went looking for a broker who’d finance the mortgage for her dream house in Monroe.

“I consider us lucky in the sense we were able to get a lender that was understanding what we really wanted to 
achieve and we moved forward from there,” she said.

Some people joke, QE3 sounds like a cruise ship. But maybe that’s not inappropriate, considering the Fed launched it into uncertain waters of a stalled economy. Some people jumped on board and found safe harbor, while others are still struggling to stay afloat.