Mortgage Rates Plummet — Is Now the Time to Buy a Home?
The 30-year fixed-rate mortgage rate averaged 2.97% for the week ending April 22, a decrease of seven basis points from the previous week, Freddie Mac reported.
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Thirty-year loan rates have fallen over 20 basis points compared to a year ago, CNBC reports.
The decline in mortgage rates provides a unique opportunity for those looking to purchase a home. In recent months, the demand for homes surged amidst the COVID crisis, driving mortgage rates up. Home prices went along with the increase, creating a “bubble” that made it financially prohibitive for many would-be buyers to enter the market.
Now comes a bit of reprieve with rates. CNBC reports that “total mortgage application volume surged 8.6% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That is the first overall increase in weekly applications since the end of February.”
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Interest rates are still historically low, which makes it a particularly favorable time for buyers to strike. The current low supply of homes is expected to turn around as economic recovery — and building — ramps back up.
The data concerning increases in mortgage applications is of particular interest, as it suggests an underlying market of willing buyers waiting for agreeable market conditions versus a constricted market of buyers unable to make purchases. Additionally, it agrees with a larger consensus on Wall Street that there is a tremendous amount of pent-up savings waiting to be spent — at the right time — by people who have been contained at home for the past year.
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Willing buyers with no outlet to spend signals demand indicators that not only could eventually spike mortgage rates back up, but cause an overall increase in prices as well. The data also favors those who believe the economy is at a point of expansion rather than a point of still-sustained constriction.
Inflation fears have been brewing on Wall Street for months now, and if a surge in mortgage applications continues, the only way for prices to go is up. If you’ve been contemplating purchasing a home with capital ready, it might be best to strike now while the iron’s hot.
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