After the Fed’s rate cut, there’s lots of talk about lower rates. Whether mortgage rates rise or fall from here, it’s still a great time to be a homebuyer.
| Many home buyers may be expecting lower mortgage rates in the wake of the Federal Reserve’s decision on Wednesday, July 31, to reduce their benchmark federal-funds rate, the first easing of monetary policy in over ten years. Because it was so widely expected, the Fed’s move was already reflected in mortgage rates. That is, the cut in the short-term rate was already “priced into” mortgage yields by the time it came. The key point to remember: Although mortgage rate changes can be volatile, they move in response to shifting market conditions and in anticipation of Fed policy. They do not change in reaction to a Fed policy change that was widely expected. The great news is that mortgage rates are the lowest we’ve seen in two years. They’ve fallen dramatically over the past eight months – from an average of 4.87% in November to a 3.77% average in July. In the week ending August 1, the industry average was 3.75%. Consider the impact of this decline on a monthly payment. For the 30-year fixed-rate mortgage, the decline from November’s 4.87% to July’s 3.77% reduces the monthly principal and interest payment by $65 for every $100,000 borrowed, a savings of over $23,000 over the term of the loan. |
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______________________________________________________________________________Home appreciation slowing While mortgage rates have been falling, home prices increases have been decelerating. The most recent reading of a popular home price gauge shows a 5.1% increase over the past twelve months. A year ago, home prices were rising at a 7.4% rate.
Home sales cooling off Meanwhile, housing sales are slowing. The number shows a 5.1% increase over the past twelve months. A year ago, home prices were rising at a 7.4% rate.
Bottom line: This is a great time to buy! Low mortgage rates .and a more balanced housing market are helping with affordability, so if you’ve been waiting to buy a house, now may be a great time to act. . . Source: CNBC