How low are interest rates? Really? Here is the big picture…

I just found this and thought it would be interesting for clients that call and tell me 3.49% for a 5 year fixed is way to high!

I’m not sure what you were expecting so here is a good barometer of the real picture.

• 6.5% = the 30 year average of the 5 year fixed closed, mortgage term
• 4.0% = the theoretical lowest the 5 year can go as banks need to borrow the funds, administer them and make a profit,
• 2.89% = the lowest the 5 year rate has ever been.

Now for the big picture…

Short version: rates are the lowest of all time … like a 496 year low. Is that low enough?

“in July 2012, 10-year yields in the US thus reached with 1.39% the lowest level since the beginning of records in the year 1790.

In the Netherlands – which provide the longest available time series for bond prices – interest rates fell to a 496 year low.

In the UK, ‘base rates’ are currently at the lowest level since the founding of the Bank of England in 1694.

In numerous countries (Germany, Switzerland), short term interest rates even fell into negative territory.”

SO … mortgage interest rates have never been lower and now the trend is up.