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Low interest rates help buyers and owners

Low interest rates help buyers and owners

Interest rates for 15- and 30-year fixed mortgages continue to stay low, reports CNN Money. Last year, the 15-year fixed rate averaged 3.07 percent, but last week, it dipped to 2.56 percent. The 30-year fixed rate averaged 3.35 percent, which is only a 0.04 percentage point above the record low of November 12, 2012.

These interest rates help both potential homebuyers and existing homeowners. Competitive rates help drive consumer demand for houses and increase prices. Over the last 12 months, the S&P/Case-Shiller home price index measured a 9 percent gain in residential property prices, enabling underwater homeowners to regain some of their lost equity.

Mortgage refinance applications have gone up. Last week, they jumped by 1.8 percent, according to the Mortgage Bankers Association, and accounted for nearly three-quarters of all home loan applications. HARP’s share of refinance applications was 34 percent last week, marking a high point since the MBA started tracking such applications in February 2012.

As of May 1, 2013, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.60 percent, the lowest since December 2012′s rate of 3.65 percent. The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.84 percent, the lowest rate since December 2012′s rate of 2.89 percent.