A lot of people can’t afford to purchase a property such as a house in straight cash. That’s why they run into lending institutions such as banks to borrow money and pay the total amount called mortgage loan. The borrower and the lender then agree to pay the total amount with interest. The property being purchased will then become the collateral property in case the borrower fails to pay the mortgage loans.
So in a nutshell, home buyers and borrowers prefer low mortgage rates for them to pay off their debt easier. However, in the past few years, home prices and mortgage rates have been on the high, which keep first time home buyers away from the housing market for quite a while now. The good news at the start of 2019 is that home mortgage rates already have the largest one week drop in 10 years. The Mortgage Leader published this great news on their website, check it out below.
Mortgage Rates Have Largest One-Week Drop in a Decade
That mortgage rates had their biggest one-week drop in a decade, and that coincided with that breakout. You know we’ve been talking about how the 10-year note has seen support at 260.
Goodness, when the yield finally punched through 260, we’ve seen to 230s in the middle of the week. Pretty remarkable. And it’s something we’ve seen over and over when these barriers are broken—how bonds can really take off.
So that’s what happened this past week, so really interesting. I think you know some of the fuel to this decline in rates, and raising prices, was this economic slowdown that’s not only a concern abroad. It’s well documented what’s going on in Europe and negative yields in Germany’s 10-year bonus is yielding you know beneath zero–which is just really remarkable.
But you know some of that slowdown was even kind of showing here in the U.S. And so what was the real catalyst was that in the middle of the week Steven Moore, who’s been nominated to the Federal Reserve. He said if he gets on the Fed they’re going to vote to cut rates by 50 basis points, which is pretty remarkable, and a real departure from where the Fed was just last year. See full post here…
Mortgage dropping to a decade low is definitely good news to those who are planning to own a house through a mortgage loan. This means that more and more people now can afford to pay the loans and own the house of their dreams. Low mortgage rates in a strong economy will drive more home buyers and investors back into real estate and housing market soon.
According to KK Howley of Housing Wire, these low mortgage rates may drive more home purchase lending to a 14-year high. Economic hangover also helps a lot in lowering mortgage rates. Read more below to learn more.
Low Mortgage Rates may Drive Home Purchase Lending to 14-Year High
The recent drop in mortgage interest rates is already having an impact on overall mortgage demand as well as the demand for refinances, but just how much could the return of low interest rates impact the market?
Quite a bit, according to new data from iEmergent.
iEmergent, a mortgage forecasting and advisory firm, is projecting a 3.9% jump in total home-loan volume this year. That puts iEmergent at the head of the forecasting pack.
Freddie Mac is expecting a gain of 1.5% for total mortgage lending, according to its March mortgage finance forecast. The Mortgage Bankers Association pegs the increase at 1%, and Fannie Mae expects a drop of about half a percentage point.
Mark Watson, iEmergent’s director of forecasting, said the difference in outlooks is due to expectations about home sales.
In fact, he’s calling for $1.2 trillion in home purchase lending this year. That would make it the best year for that category since 2005. And the reason? Low interest rates.
“We think the lower mortgage rates will create a huge push, partly from Millennial buyers, that’s going to support strong growth in home sales over the next several years,” Watson said in an interview.
The decline in mortgage rates this year is due to two factors, said Watson. One is Brexit, Britain’s stalled efforts to leave the European Union. British government missteps have caused a “flight to safety” among international investors that increased demand for U.S. dollar-denominated bonds, which translated into lower rates for homebuyers, said Watson. Click here to read the rest of this post…
As mentioned earlier, low mortgage rates drive more home buyers as well as investors back into the housing market. Also, this recent drop in the mortgage rates also having a huge impact on the overall mortgage demand as well as the demand for refinancing. First-time home buyers also benefited well from this rate drop, and we do hope that this is sustainable and will last for the next couple of months and years.
If you’re subscribing to a mortgage loan for the first time and is looking to purchase a house, you can actually take advantage of this current market conditions. Gene Walden of Thrivent Mutual Funds gives us some of the best ways to take advantage of today’s low mortgage interest rates. Check them out below.
10 Ways to Take Advantage of Today’s Low Interest Rates
Earning a decent return on your savings may be particularly difficult in today’s low interest rate environment. However, it may be an ideal time for you to turn the tables and actually take advantage of the historically low rates by making some changes in your financial situation. (See: Where to Find Income in History’s Lowest-Yielding Bond Market)
Here are 10 steps consumers may wish to consider to save money on their loans, lower their monthly payment burden, refocus their investment strategy, or improve their lifestyle or their business:
1. Refinance your mortgage
If you bought a home several years ago while interest rates were higher, you may be able to cut back significantly on your monthly mortgage payment by obtaining a new mortgage with a lower rate.
The average 30-year fixed mortgage rate has been about 4.5% in recent months, according to the Federal Reserve1. Please keep in mind that the interest rate you qualify for may vary according to your credit rating. If your current mortgage is around 6% or higher, you may be able to gain significant savings by refinancing – particularly if you plan to stay in the home for many years to come.
While any monthly savings would seem welcome, it is important to point out that the comparison is not exactly apples to apples. Homeowners with a 30-year mortgage who have been in the home for a few years often refinance with a new 30-year mortgage. That may help reduce your monthly mortgage payment, but it would add back those years you’ve already paid, resetting your pay-off date back to 30 years again.
However, if you continue to make the same monthly payments as before – using your interest rate savings to go toward the principle – you should be able to pay off the mortgage years sooner than you would have with the original mortgage with the higher interest rate.
2. Buy a home
Although home prices have been rising in many parts of the country, the current environment may be a good time to buy your first home or upgrade to another home that better suits your needs.
3. Choose a fixed rate mortgage
If you are considering buying a home, you might consider choosing a fixed rate mortgage over a lower interest adjustable mortgage, particularly if you plan to live in the home for many years. According to Freddie Mac (the Federal Home Loan Mortgage Corporation), the average rate on 5-year adjustable mortgages was 3.61% as of April 2018.4 While an adjustable rate mortgage may save you some money on your mortgage payment in the short-term, if interest rates begin to move up in the future, your rate will rise along with the market and, possibly, balloon. But with a fixed rate mortgage, your rate is locked in for the entire pay-off period.
With mortgage interest rates on a 10-year low, it is indeed the time for home buyers as well as for investors to take advantage of this buying opportunity in the housing market. This is the perfect opportunity to get yourself into mortgage loan since the interest rates are much lower and these rates are also locked in for the entire pay-off period. No need to worry if the interest rates will increase later.
If you find this latest mortgage interest rates attractive and wanted to purchase a new house, we at Dependable Homebuyers can help you find houses according to your budget, especially in Baltimore and Nashville area. To learn more about us, visit https://www.dependablehomebuyers.com.
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