The 4% Mortgage Rate is Back
Mortgage rates are quickly dropping and approaching 4%. This low rate has economists and lenders thinking the housing market will jump again.
In the last week of March, the average rate on a 30-year fixed mortgage rate fell to 4.06%. This is the lowest rate it has been since January of 2018. The rate dropped down nearly a quarter from the previous week. This was the biggest drop in over a decade.
Many rates are even now lower than 4%. There are some lenders who are advertising mortgages at sub-4% rates.
A few months prior, rates were near 5% which slowed down the opportunity for home price growth. The housing market remains cooler than it was during its peak. These low mortgage rates are giving hope to the spring market.
Mortgage rates have been declining along with the yield on the benchmark 10-year Treasury note. This has been caused by the Federal Reserve’s decision to pause its interest rate increases. Investors are uneasy about the expected pace of the growth of the economy for the remainder of the year. This left prospective buyers on the sidelines after the rates went up.
Many people have gone from locking in a mortgage rate 4.375% to 3.99%. This adds up to over a $1,000 worth of saving on interest.
While mortgage rates have fallen, a housing-market rebound faces other obstacles. After a brisk rise in home values in recent years, median prices were unaffordable to the average earner in nearly three-quarters of counties around the country in the first three months of the year.
Low rates are boosting refinancing applications, which rose 12%. As of recently, 3.3 million homeowners saved money by refinancing their mortgages. Many have done this since January 2018.