The Fed announced no more rate hikes in 2019 and dialed back rate-hike projections for 2020. Remember: It’s not so much what they do, as it is what they say. The lack of rate hikes in and of itself is not why mortgage interest rates are falling. It’s because the Fed said, “We’re not going to raise rates because inflation is tame and economic growth is slowing.”
Psychologically speaking, people are more averse to losing money than they are averse to gaining it. So, when the Fed says “Park your money in mortgage bonds because you won’t lose a bunch due to inflation, and there’s cause for concern in the stock market” – guess what people did?! They parked a bunch of money in mortgage bonds!
Ok, they didn’t really say that, but that’s the layman’s interpretation of their announcement last week. What does this mean for you, or if you’re an agent – your clients? Thanks to my handy-dandy mortgage calculator, this drop in rates equals:
- $334.09 savings per month on a $600,000 mortgage ($4,009.08 per year)
- $222.73 savings per month on a $400,000 mortgage ($2,672.76 per year)
- $111.36 savings per month on a $200,000 mortgage ($1,336.32 per year)
What Does This Mean?
This is great news if you have a mortgage, or are looking to get a mortgage (aka, looking to buy a home in the near future). The drop in rates comes at the perfect time for the Spring Buying Season. It gives Puget Sound homebuyers more purchasing power than they’ve had in 15 months!
Per Bankrate.com, the 30 Year Mortgage interest rate Fell to another 15 month low at 4.17%, with .36 in discount and origination points.
Rates are at their 1 year low!
Mortgage rates this week
The benchmark 30-year mortgage rate plummeted 27 basis points this week, the biggest weekly drop in a decade, creating a huge affordability window for homebuyers and homeowners looking for a mortgage refinance, according to Bankrate’s latest survey of the nation’s largest mortgage lenders.
“Worries about slowing economic growth — both domestically and abroad — and the inversion of the Treasury yield curve put investors into semi-panic, bringing bond yields still lower after the Fed indicated no more rate hikes in 2019,” says Greg McBride, CFA, Bankrate’s chief financial analyst.
The last time the benchmark 30-year rate was below this level was Jan. 3, 2018 when it hit 4.10%, according to Bankrate’s historical data.
The massive drop in rates comes just as the busy spring homebuying season kicks off. And that’s great news if you’re in the market to buy a home or refinance your current loan that has a higher rate.
The benchmark 30-year fixed-rate mortgage fell this week to 4.17% from 4.44%, according to Bankrate’s weekly survey of large lenders. A year ago, it was 4.54%. Four weeks ago, the rate was 4.54%. The 30-year fixed-rate average for this week is 0.93% points below the 52-week high of 5.10%, and is identical to the 52-week low of 4.17%.
The 30-year fixed mortgages in this week’s survey had an average total of 0.36 discount and origination points.
Over the past 52 weeks, the 30-year fixed has averaged 4.73 percent. This week’s rate is 0.56 percentage points lower than the 52-week average.
• The 15-year fixed-rate mortgage fell to 3.63% from 3.79%.
• The 5/1 adjustable-rate mortgage fell to 3.98%from 4.15%.
• The 30-year fixed-rate jumbo mortgage fell to 4.21%from 4.38%.
• At the current 30-year fixed rate, you’ll pay $487.27 each month for every $100,000 you borrow, down from $503.13 last week.
• At the current 15-year fixed rate, you’ll pay $721.28 each month for every $100,000 you borrow, down from $729.21 last week.
• At the current 5/1 ARM rate, you’ll pay $476.26 each month for every $100,000 you borrow, down from $486.10 last week.
The “Bankrate.com National Average,” or “national survey of large lenders,” is conducted weekly. The results of this survey are quoted in our weekly articles and national media outlets. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans, and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. https://www.bankrate.com/mortgages/analysis/
City of Seattle Stats for Single Family Residences – Updated 3.23.19
These charts are Seattle Specific, but the Puget Sound Real Estate Market mirrors the Seattle market.
A Note From Scott:
This weekend is going to be HUGE!!! First off, we have the Run to End homelessness this Saturday which is going to be an incredible event and there is still time to sign up.
VEGFEST is also this weekend! I have been going to this event for the past 3 years and this year I am proud to say I have a booth promoting how I’m incorporating my values into my own business. SUPER EXCITED! Even if you are not vegetarian, this event is amazing for people with specific allergies (gluten, dairy, etc) that are looking for great products or people who just loves food. Make sure to come on an empty stomach because there is so much free food! (Also stop by my booth!)
Scott Sheridan is a Loan Officer with Primary Residential Mortgage, Inc. Being in the mortgage industry for three years, Scott brings a fresh millennial flair to the industry. He is well-versed in the most modern, efficient, and convenient ways to get things done. Scott combines these skills with a genuine love of his work and recent experience in what is it like to be a first and second-time home buyer. You can follow Scott’s weekly market updates on his PRMI Facebook Page.