Anyone thinking about exploring the home market this month has just received a big incentive. According to data from Freddie Mac, mortgage rates are now at their lowest since 2016.
There’s some key information to take from the latest report. People who can afford to buy today should not wait too long in hope of the ‘perfect’ buying conditions.
Most Mortgage Rate Benchmarks are Down
All of the most popular mortgage products are more affordable today, following promising numbers from the end of last week.
- The 30-year fixed-rate mortgage hit an average of 3.45% last week, down by six basis points.
- The 15-year fixed-rate mortgage hit an average of 2.97%. This is the lowest it has been since before the 2016 presidential election.
- The 5/1 adjustable-rate mortgage was up by eight basis points, reaching an average of 3.32%. Historically, this is still an incredibly affordable figure.
The majority of move-up and first-time buyers seek fixed mortgage rates. This is especially true in an environment where rates are already close to their historic lows. Those who wait too long for what they think are the ideal conditions could be left disappointed. While rates may decline further, there’s also a chance that they could head upwards, particularly if the economy continues to expand.
Some buyers have been led to believe that a recession is on the horizon, which could potentially push rates even lower. However, recession headlines have featured in the news for over a year now. At this stage, America’s economic expansion is the longest ever seen. With new jobs and strong consumer spending data, it’s not likely that a recession will occur in 2020.
In short, anyone who can afford to buy a home should take advantage of current rates.
Affordability May Decline in the Years to Come
Some analysts believe that this spring could be the last time that we see increases in affordability. Stable federal interest rates will start to balance out, and mortgages will normalize. Without further increases in real income or more activity in the home market, affordability will only stagnate or decrease.
These reasons further support the idea that now is one of the best times in recent memory to buy.
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