After declining consistently throughout most of the year, mortgage rates made a surprise turnaround in the last week. The average 30-year fixed-rate mortgage rose slightly on Friday, increasing by 13 basis points over the previous week.
While some home buyers and investors might be concerned by the sudden change in direction, the rate increase suggests that the market is robust, and it’s still a great time to buy a home to live in or for investment.
Mortgage Lenders Have More Confidence in the Market
The Federal Reserve dropped its money rate by a quarter point last week, giving investors hope that rates would continue their downward momentum. The opposite happened, with the average 30-year fixed-rate mortgage increasing to 3.73%.
Analysts believe that the health of the economy and higher wages triggered the increase, with mortgage lenders finding that there’s enough demand in the home market to support a higher rate.
The 15-year fixed-rate was also up, averaging 3.21% on Friday. Adjustable-rate mortgage averages also climbed 13 points, resulting in a rate of 3.49%.
Higher Demand Could See Slight Increases in the Coming Weeks
Mortgage demand is higher than at any previous point this year. Home sales rose by 1.3% in August. This suggests that buyers are coming back to the home market. Lenders will have more freedom to make slight rate increases without disrupting buying patterns.
However, lenders will still need to be careful. The economy, wage growth, and unemployment aren’t the only reasons that the home market has been healthy. Low mortgage rates are also a factor, so there will be a ceiling on how high the rates can go before buyers start to pull back.
How Competitive is the Mortgage Market Compared to Recent Years?
Today’s rates are still the best that they’ve been in years, so buyers shouldn’t hesitate when finding the right property and a loan that suits. The average 30-year fixed-rate of 3.73% is better than the annual average seen for all of the previous ten years. The closest year in recent memory was 2016, when the 30-year fixed-rate averaged 3.79% for the year.
When comparing today’s rate to 4.70% in 2018 and 4.14% in 2017, it’s more than competitive.
A fixed rate mortgage protects home buyers from rate fluctuations, which are a real concern now that economic growth is slowing down. Even with recent increases, September is still shaping up to be a great month for buyers.
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