Stock market volatility and global trade tensions have weighed on financial markets this week. In any other year, the news that Mortgage Rates are down would be welcomed. However, while borrowing for a home became slightly more affordable this week, it might not be the boost that the housing market needs.
Mortgage applications are falling, and many analysts see this as a precursor to a severe slowdown in the new home market.
30-Year Mortgage Rates Down by 13 Points
According to data from Freddie Mac, the average 30-year fixed mortgage rate is now at 4.81%, down by a total of 13 points. Although the change might not seem significant, It’s the largest single-week slide since 2015. Mortgages are now around the same rate that they were in early October, slowing the upwards movement caused by recent Federal Reserve rate hikes.
For those investing with a 15-year mortgage rate is 4.24%, down by 12 points over the last week.
This means that borrowing will be slightly more affordable for buyers who are closing a mortgage, but the widespread impact across the market will likely be negligible. The rate of mortgage applications for new homes is falling. Interest rates and higher home prices have contributed to the slowdown in the market.
If you’re close to the stage of buying, then this new data shouldn’t change your decision right now. If you are open to refinancing, then a slight dip in rates could be an opportunity, depending on the fixed rate when you purchased your home.
What Does This Mean for the Housing Market?
Analysts have noted that numbers could be skewed because some buyers make cash transactions rather than apply for mortgages. However, cash transactions aren’t realistic for the majority of people, so it’s also possible that many buyers are simply priced out of the market. An overpriced home market has been a concern of analysts throughout most of this year.
Data shows that growth of the home market is slowing, but so is the economy. Slowed growth isn’t the same as recession, and that’s an important distinction to make.
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