For the first time in a decade, the Federal Reserve dropped the interest rate, but if you are a home buyer, you may have already seen the benefits! When the Federal Reserve drops the interest rate, it only directly effects the federal funds rate. This is the rate that banks charge one another for short-term borrowing. This can, and usually does, effect other interest rates, like the rates for credit cards and mortgages.
But the banks usually anticipate the changes from the Federal Reserve. So many changes in most consumer interest rates happen before the Federal Reserve’s official announcement. The average rate on the popular 30-year fixed mortgage hit 3.70% last Friday, the lowest since November 2016, according to Mortgage News Daily.
So if you are looking to buy a home, a mortgage has never been more affordable. Whether you are a first time home buyer or looking to upgrade, it is a prime time to buy. You can save thousands of dollars over the course of your home loan if you buy now while interest rates are low.
And home buyers might find less competition than they might expect. Mortgage applications rose 5.3%, but refinances drove the volume. Refinances rose 12% for the week and a stunning 116% from one year ago. Refinances are highly sensitive to even small interest rate moves, and last week’s was significant, according to CNBC.
Many buyers are hesitant to enter the market for the same reasons that the Federal Reserve dropped the interest rate. With a trade war with China making economic growth uncertain, it shakes both professional and consumer confidence in the market. But if home buyers are in a good position to buy and stay in place while the market moves, buying now may land them a great deal.
And according to the New York Times, historically speaking, mortgage rates do not have much farther to fall. In the past half-century, the average 30-year rate has never dipped below 3.3 percent.
To take advantage of the rock bottom interest rates, contact
Geva and Jane for a free home buying consultation.