The average rates on 30-year fixed-rate loans hit record lows this week. Mortgage News Daily reports that the average rate for a 30-year fixed rate loan is just barely above 3%; for FHA loans, its dropped all the way to 2.75%.
That’s lower than we’ve seen in many, many years.
Why are rates dropping so low?
Of course, we know the COVID-19 pandemic is involved. But according to Fed chairman Jerome Powell, this has hit the economy in ways that are worse than any typical recession. Powell stated recently: ”The scope and speed of this downturn are without modern precedent and are significantly worse than any recession since World War II.” That’s powerful.
With predictions that our economy may not recover until the end of next year, the government is working to provide as much help as possible.
"We expect mortgage rates to stay low and possibly slip lower," says realtor.com Chief Economist Danielle Hale.
What this means for you
A dramatically lower mortgage rate can give you a dramatically lower monthly payment.
For example, on a $300k home, a 30-year loan with a 20% down payment, a fixe rate of 3% vs. a fixed rate of 4% will save you $134 per month. That's almost $50,000 in savings over the life of the loan.
There’s a lot you can do with that money - for one, you can afford “more house” for the same monthly payment as you would before. Or you can save it towards something else. Either way, it shouldn’t be ignored if home buying is on the horizon for you.
For sellers, remember inventory is still low, and prices, according to MRED weekly stats monitoring, are still higher than 2019 (and are working their way up). Buyers have more buying power to increase their price range for the same monthly payment.
If you’re in the market, buyer or seller, talk to us. We’re local experts who can walk you through your questions, personally. Click here to ask an arhome agent.