If you’re in the market to purchase a new home, mortgage rate trends show us that now is the time to do so. The good news for anyone currently in the market for a new home purchased through financing is that the rates on 30 year mortgages are now dropping, according to Freddie Mac. In fact, this is the third straight week we have seen lower interest rates on long term mortgages, with a trend towards reaching the year’s lowest peak.
The rates on 30 year mortgages were at 4.14 last week. This week they have dropped to 4.10 percent. A year ago we saw some of the lowest rates since 1971, with the average interest rates on one of these long term loans sitting at 3.65 percent.
It isn’t just 30-year fixed rate mortgages which have seen lower rates, but also 15-year fixed rate loans. They have also been consistently dropping, with a decrease this week to 3.36 percent from last week’s 3.39. Adjustable five year mortgages are not following this downward trend, however, and have risen to 3.19 percent last week to 3.18 percent this week. This tells us that short term loan rates are not doing as well as long term ones.
Freddie Mac calculates these average weekly mortgage rates through a country-wide survey of lenders done between Monday and Wednesday of every week. An important thing to note, however, is that these rates provided by Mac do not include fees, also known as points.
Most borrowers are required to pay fees in order to get a lower rate on their mortgage. One point is equal to one percent of the total loan amount. These fees on 30-year mortgage rates, thankfully, have stayed consistent at 0.5 points since last week. For 15-year mortgage rates, however, they have raised from 0.4 to 0.5 points.
The bad news is that the Federal Reserve has raised key interest rates for only the third time since 2006, although economists do not expect for anyone to see higher interest rates until later in the year. This makes now the perfect time to jump on that new home purchase – before the rates go up.
There is a bright side to the raised key interest rates. Although higher rates don’t sound good, it does reflect a financially stable economy. Unemployment rates currently sit at a healthy, low 4.7 percent, which is great news.
To indicate whether the economic strength is or is not going to be sustained, investors are looking towards the March job data (provided by FactSet). The expected answer is yes, since employers added around 178,000 new jobs this past month. If the economy stays stable, rising interest rates shouldn’t present a large problem.