Mortgage Blog

Mortgage Rates Plunge

The Modern Economy

The housing market has fluctuated dramatically over the course of the last twenty years. Today, the economy in general is changing rapidly. Experts use different metrics when they're trying to access the health of the economy and the housing market. Changes in any of these metrics can have complex consequences, making it difficult to predict exactly what will happen to the prospects of investors, customers, and home buyers today.

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Mortgage Rates Today

Freddie Mack has been recording information on long-term mortgage rates since 1971, so experts have a lot of data to work with at this point. They can examine the changes that have occurred over the course of several generations at this point, making it easier to study the implications of changes in the housing market.

As recently as 2019, the mortgage rate for a 30-year loan was nearly four percent. At present, it's gone done to just over three percent. Given the costs associated with these three-decade loans, a decline of nearly a full percentage point is very dramatic.

It's also notable that this is the single lowest mortgage rate for loans of its type that's ever been recorded. While it's possible that mortgages had lower rates than this before 1971, it still represents a historic milestone in the American housing market today.

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The rates for 15-year fixed-rate modern mortgages has also gone down recently. Today, the rate stands at almost exactly halfway between two and three percent, which means that it's declined since the beginning of June. The rate was much closer to three percent only a few weeks ago. It was closer to four percent than three percent in 2019, making this a drop of more than a percentage point.

The Implications of Reduced Mortgage Rates

Some people specifically buy houses when the mortgage rates decline in order to get better returns on their investments. The news of lowered mortgage rates may encourage more wealthy people to start buying homes now. The young adults who have put off purchasing homes since the Great Recession might start to buy houses now, knowing that the low mortgage rates could make the purchase more cost-effective.

The demand for new homes has indeed improved recently. Some experts have said that the housing market never truly recovered after the Great Recession. It's possible that the current housing market fluctuations could help this industry recover more dramatically. The fact that mortgage rates have potentially sunk to the levels that people remember from the 1960's and earlier, when it was often easier for people to afford a home, might have a broad and lasting impact on the home buying potential of many people.

However, there aren't as many new houses being constructed at this point in time, at least for now. It is possible that the prices will increase again when there is much more competition for the homes that do exist, unless it becomes possible for construction companies to easily create new homes again in the economy of today.

Please call our office at 239-514-2674 for a rate quote, alternately you can apply now for a fast loan prequalification!

 

Disclaimer: This content is for informational purposes only. Our blog is an opinion about current market conditions. Annual percentage rates are only provided when exact rates quotes are given when borrowers provide credit score, purchase price, down payment and loan product is requested. The rates provided above are national averages and should not be considered without consulting our office.

NMLS #1743702 Rates, Programs, Guidelines are subject to change without notice.

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