For the third straight week, average rate on 30-year mortgages fell this week. Falling oil prices and concerns about economic growth are affecting markets, and hurting global stocks. On Thursday, mortgage buyer Freddie Mac said that the rate dropped from 3.92 percent to 3.81 percent. A year ago, the average was 3.63 percent. Although the current average rate on 30-year mortgages is higher than it was a year ago, it is still lower than the historical average of 6 percent. The average rate on a 15-year fixed-rate mortgage also fell, from 3.19 percent to 3.10 percent.
Bankrate.com polled mortgage experts this week about their predictions. Half of them said they think rates will fall even further over the short term, and only 20 percent predicted a rise. The rest expect only little change.
What affects the average rate on 30-year mortgages?
On Wednesday, stocks fell on Wall Street, following a big fall in the price of oil. The Dow Jones industrial average dropped more than 500 points during the day. The market gained back most of decline but still ended with a loss of 249.28 points, or 1.6 percent. Investors seek safety in bonds when the stock market sees trouble, driving those prices up. That lowers yields on bonds, lowering mortgage rates.
According to the Associated Press, “the yield on the 10-year Treasury bond dropped to 1.98 percent Wednesday – its lowest level since October – from 2.09 percent a week earlier. The yield slipped further to 1.97 percent Thursday morning.”
When the Federal Reserve raised interest rates last month, many people assumed that the average rates of mortgages would rise significantly too. If you were one of those people who then put off buying a home, wait no longer. The average rate on 30-year mortgages is dropping due to other economic circumstances. It is still low and affordable. If you have questions about financing your dream home in Miami, please contact RE/MAX Paradise today!