home mortgage rates

After 6 weeks of mortgage rate declines, buyers start moving

Bethany RamosFirst-Time Homebuyer, Home Buying, Homeowners, Mortgage Rates, News

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Home mortgage rates have fallen almost half a percentage point — enough for buyers to take notice. Interest rates for the 30-year fixed rate mortgage have slipped from 4.94 to 4.45 percent since early November. As of last week, these rates were trending downward for six weeks in a row.*

Home sales in November 2018 were already picking up speed, but six weeks of low-and-steady rates could ramp up sales more than expected. As the National Association of Realtors’ Chief Economist Lawrence Yun recently told Yahoo! Finance, declining mortgage rates* should keep home sales moving.

Yun said:

“Buyers will want to take advantage of the lower rates. This additional demand will help absorb inventory. Both home prices and home sales will be lifted.”

Low rates increase buying power big-time

Freddie Mac’s latest Primary Mortgage Market Survey shows interest rates holding steady at 4.45 percent for a 30-year fixed rate mortgage, significantly lower than the high of 5.8 percent predicted for later this year.

Even a 1-percent rate increase makes a difference when it comes to your monthly payment. Here’s a quick breakdown:**

  • Now: Buying a $250,000 house at today’s 30-year fixed mortgage rate of 4.45 percent could cost you $1,259 a month in mortgage.**
  • Half-point interest rate increase: Waiting to buy a $250,000 house until rates reach 5 percent adds on $83 a month, or $996 a year, with a $1,342 monthly payment.
  • One-point interest rate increase: Waiting to buy a $250,000 house until rates reach 5.45 percent adds on $153 a month, or $1,836 a year, with a $1,412 monthly payment.

Rates are great. Why wait? Download LoanFly and get prequalified in minutes.***

So, it’s possible to save close to $2,000 a year by buying at today’s rates versus a 1-percent rate rise that’s expected this year.

The interest rate you get when you buy a house not only influences your monthly payment, but it has much to do with your buying power too.

Buying power, or purchasing power, is how much house you can afford to buy within your budget. When interest rates increase, as they’re expected to in the coming months, the amount of house you can afford will automatically decrease if you stay within the same budget.

In some parts of the U.S., rising interest rates combined with low housing inventory that drives up prices have made it harder for many first-timers to buy. Redfin’s latest housing market data notes this affordability issue, though Redfin’s Chief Economist Daryl Fairweather predicts that homebuilders will start constructing more affordable homes in 2019 to take even more pressure off starter home prices.

How low will they go? And when should you act?

Mortgage rates may not get much lower, but they are expected to rise in 2019. Even a small spike in interest rates can increase the cost of your monthly mortgage. With more affordable homes and slowing interest rates, this is a great time for buyers to make their move. Still, rising rates this year are likely to be only a minor concern for homebuyers who are motivated.

Home price growth is slowing, wages are increasing, and homes could be easier to buy. Prequalify Now to find out how much house you can afford at today’s lower rate.

**MBS Highway payment estimate, 2019. Rates listed are for illustrative purposes only.

***During normal business hours.

For educational purposes only. Please contact your qualified professional for specific guidance.

Sources are deemed reliable but not guaranteed.

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