Despite the Chicken Little’s on Wall Street, mortgage rate trends have defied expectations this year. And at the end of July, the mortgage interest rates on 30-year mortgages, by far the most popular option, dropped below 4% to reach a nationwide average of 3.98%. Even better, early indicators suggest mortgage rate trends will continue to fall as the summer comes to an end, and Federal Housing Authority (FHA) and Veteran’s Affairs (VA) mortgage rates are dropping as well.
So what does all this good news in mortgage rate trends mean for your average American household? When mortgage rates are lower, potential home buyers can afford bigger and better homes, meaning in 2015 home buyers can afford about 10% more expensive homes than last year. That means if you’ve been saving up to purchase your first home, or if you’re looking to upgrade to your second home, then 2015 is a very good year to buy.
But 2015 is also a good time to be a homeowner. For those looking to sell their homes, lower mortgage rate trends mean that it will not only be easier to find a buyer, but also easier to negotiate a better price. In addition, those looking to refinance mortgage rates are better positioned to take advantage of the rebounding real estate market. In fact, the latest Refinance Report from the U.S. Federal Housing Finance Agency concluded that the total number of refinances are up 80% compared to 2014.
And if that wasn’t enough, home prices have been steadily increasing, bring the number of Americans underwater on their mortgages to much lower levels. Of course, these numbers could change quickly, and there are no economic guarantees. Even so, the 4% home mortgage interest rates benchmark is an important psychological threshold, increasing confidence in the economy and real estate market overall.
So after the dark years of the Great Recession, learn to appreciate good news when it comes. Especially when it comes in spades.
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