Fixed mortgage rates have been declining throughout 2019, and conditions are getting even better as we move towards the final quarter. Fixed rates fell by -9 basis points this week. They could go even lower with a Federal Reserve rate cut likely by the end of the month.
Here’s what home buyers need to know about the market today.
Lowest Mortgage Rate Since 2016
The 30-year fixed rate mortgage dropped to an average of 3.49% this week, making it the lowest since October 2016. Rate data is collected weekly, and the figure has declined or remained flat for all but nine weeks of the year so far.
The average 15-year fixed rate mortgage has also become more affordable, with a drop of -6 basis points to 3.00%.
The 5 Year Adjustable Rate Mortgage (ARM) remained mostly stable with a -1 basis point decline to put it at 3.30% on Friday.
Data was collected from Freddie Mac, the Federal Home Loan Mortgage Corporation. The government-sponsored enterprise said this week that the rate declines were due to “weaker economic data”. It said that overall economic growth is clearly slowing and that trade headwinds are rising, but assured consumers that economic fundamentals are “still solid.”
Mortgage rates are loosely connected to the 10-year Treasury Note, which has seen a declining yield in recent weeks.
The Federal Reserve Could Trigger More Slides in the Short Term
The United States Federal Reserve will begin its next two-day policy meeting on September 17. It is expected that the board will vote to cut rates by a quarter point.
The rate cut will offset the slowing economy, economic impact of trade tensions, and other headwinds like a slowing U.S. manufacturing sector. Fed rate cuts affect mortgage rates indirectly, so home buyers can expect to see even better fixed term mortgages by the end of this month.
It’s Still a Great Time to Buy a Home
Home buyers won’t often see conditions as good as they have been in 2019. The job market is strong, unemployment is at a record low, and real wages are slowly rising. This puts more people within reach of home ownership.
With consistent rate declines in the mortgage market, now is still one of the best times to buy a home for investment or residence.
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