Those who are searching for a home just received an unanticipated bonus from plummeting interest rates. The fall occurred after the U.S. stock market experienced a tumble. Because of the dip, 30-year fixed mortgage rates shifted down significantly to 3.75 percent. A week ago, rates were above 4 percent. Analysts have been predicting rate increases for the last few months, so this decline is particularly surprising. In just one night, the rate decreased by an eighth of a percentage point. This figure may seem small, but the housing industry considers it a major change since it happened in a short amount of time.
Across the nation, the number of home listings is low. This factor increases competition, which means that homebuyers need every drop of savings possible. The rate reduction gives them a little extra help. Lower rates equal decreased monthly payments and more loan qualifying power.
Since low mortgage rates are available due to the stock market’s drop, some buyers will hesitate to move on a home if their finances are tied to the market as their personal funds may have decreased.
Taking the Leap
Home purchases are typically the largest and most emotional investment that the average person makes. Because of this, people tend to take their time and select a home cautiously. Redfin’s chief economist, Nela Richardson, said, “If you are in the market now looking, it does add a sense of urgency.” We agree with her assessment. Low interest rates increase your home buying power.