Nick, & Cindy Davis

Mortgage rates report largest drop

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Purchasing a home just became a lot cheaper, thanks mostly to the Federal Reserve’s decision last week to place its interest rate hikes on hold for the time being. Mortgage buyer Freddie Mac said Thursday that the average 30-year fixed rate mortgage plunged to 4.06 percent this week, below 4.28 percent last week. Which is the steepest weekly decline in 10 years.

Mortgage rates report largest drop in a decade

Mortgage rates report largest drop in a decade

 

Last week, Fed chairman Jerome Powell said the U.S. economy faces several headwinds, including slowing global growth, a trade war with China, and fading impacts from last year’s tax cuts. Fed policymakers signaled they were unlikely to increase rates in 2019, after projecting two hikes in December.

Lower rates on mortgages, slowing home price increases along with a pickup in the quantity of available homes seem to be rejuvenating home sales following a slowdown in 2018.

Sales of existing homes surged 11.8% in February, an indicator that lower rates were encouraging more people to purchase homes. The average 30-year rate reached 4.95% in November, following a number of rate hikes by the Fed.

Mortgage expenses are more directly affected by the yield on the 10-year Treasury note, which also rose in 2018 as many investors shifted money into stocks. Stock market indexes rose at a healthy pace until last fall.

The yield on the 10-year note has fallen sharply since last year, when it touched 3.21% in November. On Thursday it fell to 2.39% in mid-day trading.

Prospective buyers have rushed to benefit from the cheaper borrowing costs. An index measuring applications for mortgage loans jumped 9% last week, the Mortgage Bankers Association said.

Fewer people signed contracts to purchase homes in February in comparison with the previous month, suggesting home sales will settle down a little after January’s big jump. But economists expect sales will continue to improve in 2019 after last year’s slowdown.

Hiring continues to be steady in recent months and average pay growth has accelerated, making a home purchase more economical.

“With mortgage demand strengthening in the wake of the decline in mortgage rates, we look for better sales in the second quarter,” said Ian Shepherson, chief economist at Pantheon Macroeconomics.

Freddie Mac surveys lenders throughout the country between Monday and Wednesday each week to compile its mortgage rate figures.

The average doesn’t include extra fees, referred to as points, which most borrowers must pay to obtain the lowest rates.

The average fee on 30-year fixed-rate mortgages ticked up this week to 0.5 point from 0.4 point.

The average 15-year mortgage rate also fell, to 3.57% from 3.71%. The charge was unchanged at 0.4 point.

The average rate for five-year adjustable-rate mortgages dropped less sharply, to 3.75% from 3.84%. The fee remained at 0.3 point.

Ready to find your new home here in the Tampa Bay and Surrounding Areas? Nick, Cindy & Nicholas Davis with RE/MAX Premier Group are here to assist you with all your Real Estate Needs. We are always available at 813-300-7116 to answer your questions or you can simply click here and we will be in touch with you shortly.

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