Tips & Tricks For Buyers and Sellers
Mortgage Rates Hit 52-Week Low After Fed Meeting
- The average rate on the popular 30-year fixed rate mortgage, which had been sitting for days at 4.40 percent, fell sharply to 4.34 percent, the lowest in over a year and 19 basis points lower than a year ago.
- The rate had surged to over 5 percent at the start of November, which caused home sales to fall sharply in December and January.
- Looking at the 30-year fixed rate on a $300,000 mortgage, every 25 basis point move down means a savings of $50 on a monthly payment.
The Federal Reserve’s signal that it doesn’t plan to raise interest rates for the rest of the year are quickly sending mortgage rates lower. The average 30-year fixed rate mortgage has dropped to 4.34% from 4.4%, taking it to a 52-week low, according to Mortgage News Daily. That could be the shot in the arm the housing market needs to get out of its current lull. The new rate is significantly lower than the 5.05% rates hit last October, which was the highest level for a home loan since February 2011. As a result of that surge, sales tumbled in November and December.
The Fed on Wednesday, following its two-day meeting, said it would be “patient” as it monitors data for changes in the economy or inflation pressures. Eleven of the 17 Fed officials helping to set interest-rate policy said they saw no need to raise rates this year. Only two held that opinion in December. After the announcement, the yield on the 10-year Treasury fell to its lowest level since January 2018. Mortgage rates tend to track with the 10-year Treasury, meaning they could continue to go lower in the months to come. The drop in rates helps both potential buyers and current homeowners who might be able to benefit from a refinance — but it all comes with a caveat. The Fed isn’t raising rates because the economy is weakening. Danielle Hale, chief economist at realtor.com said,
“While a plus for homebuyers, if concerns about the economic outlook rattle consumer and homebuyer confidence, it could offset the benefit of lower mortgage rates”
If you plan on buying a home this spring, let’s get together to prepare you to take advantage of today’s market before rates increase!
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