Mortgage Resource Center

Empowerment through Education
Feb 11, 2020
What Low Rates REALLY Mean to Homebuyers

You’ve probably seen the headlines: “Interest Rates Are At A Record Low” all over the news recently. Great news- right? But as a reader, do you ever wonder, “What determines mortgage interest rates?” or “What caused the rates to drop in such a dramatic fashion?” or, better yet, “So what exactly does this mean for homebuyers?” and of course, the burning question “How long will the rates stay low for?”.

Well, let’s check out some statistics that will provide a better idea of how low-interest rates can affect buyers (and even sellers):
 
In 2018, interest rates fell from 7% to 3.8% amid homes becoming more affordable (bad news for sellers, good news for buyers). Click Here
 
Freddie Mac reported that the average for a 30-year fixed mortgage sank to 3.6% — the lowest rates for January in seven years. Click Here
 
In 2019, interest rates close out the year at 4.7% as home prices rose. (Making it equally beneficial for both buyers and sellers; Since interest rates are still low, homeowning is still relatively affordable even though home price tags are displaying higher numbers.) Click Here
 
694,000 new single-family houses were sold in January 2020- up a whopping 24% since December 2019. Click Here
 
At the market’s lower end, homes in the bottom 20 percent (by price) continue to grow at nearly three times the rate of those in the top 20 percent price tier; 6.6 percent versus 2.3 percent in the last four months of 2019. Click Here
 
Fannie Mae predicts that rates will stay low throughout 2020. Click Here
 
Also at the market’s lower end, homes in the more luxurious price range almost tripled in value (compared to homes in the lowest price ranges; their values stayed stagnant.) Click Here
 
Homebuying has increased by 16% since rates dropped. Click Here
 
So, as a potential homebuyer, how do you keep track of changes in interest rates? For one thing, interest rates are very dependent on fluctuations in the current market; So by staying “in the know” on financial news and updates, you can properly gauge what’s happening in the finance realm. For example, the coronavirus scare caused a decrease in spending oversees (namely, “China”) causing investors to take their stocks out of China trades and instead, invest them into local US treasury bonds. Since treasuries are currently at their lowest levels since October 2019, and 30-year fixed mortgages follow suit with 10-year US treasuries, this caused a recent drop in mortgage interest rates.
 
Another way to review current mortgage trends is to speak with a mortgage professional. A diligent mortgage loan officer understands it’s their duty to stay on top of changes in the economy that will affect these rates in order to better benefit their clients. At Get A Rate, we offer solutions to our clients in order for them to obtain the best mortgage experience possible. We also leverage top digitized solutions in order to help homebuyers save time, money and personal energy. You can check out today’s mortgage rates by Clicking Here or contact us at 888-562-2611.
 
Thanks for reading!
 
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