Are you thinking about buying a home this summer? Now might be the time to strike, with mortgage rates dropping to their lowest level in over a year.
The average rate on a 30-year fixed-rate mortgage has dropped substantially to 4.31 percent. That is a significant drop of ten basis points (one hundredth of a percent) from last week, according to Freddie Mac.
This all means that home mortgages are becoming more affordable, which is good news for movers and investors alike.
Home Prices Too High?
A significant drop in mortgage rates may not be enough to offset the sky high prices of homes right now.
Mortgage rates dropped below 4% for the first time since early last year, adding to hopes for a revival in the housing market, which has cooled after years of torrid price growth https://t.co/yAhUW94LFh pic.twitter.com/bG1wd2mxUF
— The Wall Street Journal (@WSJ) May 30, 2019
Refinances are certainly up on the news. The rate of refinance applications is up six percent this week compared to last week and up 33 percent on the year. That’s to be expected, though, as refinances are highly rate sensitive.
The same renaissance has not be seen in new purchase applications. The rate for those is down two percent this week compared to last week, and is up just half a percentage point from last year. Home prices are still too high, especially for first time buyers, a significant part of the real estate market right now.
This may continue to be an issue, as reports yesterday indicate that home prices increased for the first time in 12 months.
Should You Invest?
As always, the question of whether you should buy now depends on your situation. Where are you living? How are home prices doing in your area? If they’re booming, it might be wise to get in now, and watch your investment grow. Never do anything you can’t afford.
The rates right now are great, but they could conceivably go much lower. In the meantime, weigh your options and make the decision that makes the most sense for you. For many of us, a home is the biggest investment we’ll ever make, so make it smartly.