And you should do it right now.
Mortgage rates just had their biggest one-week decline in more than a decade, and let’s remember that rates were already near historic lows. (Let’s also remember that it seems like just yesterday that they were up over 5% and the Fed was promising more rate increases throughout 2019.)
Last week, the average interest rate on a 30-year, fixed-rate mortgage was 4.28%; this week, they’re down to 4.06%. A year ago, rates were averaging 4.40%. Rates for less-popular 15-year fixed-rate loans are also down, from 3.71 percent last week (and 3.9 percent last year) to 3.57% this week.
The drop was due to a mixed bag of economic factors, according to Sam Khater, Freddie Mac’s chief economist. “The Federal Reserve’s concern about the prospects for slowing economic growth caused investor jitters to drive down mortgage rates by the largest amount in over 10 years,” he said. “Despite negative outlooks by some, the economy continues to churn out jobs, which is great for housing demand.”
Buyers who have been unsure about getting into the market may want to take a good look now, according to experts. Today’s rates are the lowest they have been in 14 months, and that means extra buying power. “Rates have fallen substantially in the past four months,” said the Washington Post. “After hitting a seven-year high of 4.94 percent in November, the 30-year fixed-rate average has gone down nearly a percentage point.”
The Real Deal notes that, “High mortgage rates in the fall pushed mortgage applications to a four-year low,” but that deficit has been quickly erased. Current falling rates have also boosted mortgage applications; according to the Mortgage Bankers Association, “The market composite index — a measure of total loan application volume — increased 8.9 percent from a week earlier,” said the Post. Not surprisingly, “The refinance share of mortgage activity accounted for 40.4 percent of all applications.”
Effect on new homes
The decline in rates have also impacted new home sales, as buyers look to take advantage of savings. “The housing market, damaged by a spike in mortgage rates last year that cut into affordability, is signaling that it’s getting some strength back. Two publicly traded builders, Lennar Corp. and KB Home, credited lower rates for better-than-expected home order,” said Bloomberg.