Now that the Presidential Election has come and gone the non-stop rise of the mortgage rates has finally seen the constant ascension halted, or at least for a week as early 2017 Interest Rates Falling has been witnessed. This will come as some welcome news for potential borrowers as they have seen nothing but a steady rise from Election Night through last week or just about 2 full months of rising rates. Over the past week, mortgage rates were seen decreasing from a national 30-year average for Conventional Loans of 4.32% down 12 points or .12% to settle at 4.20%. These statistics are coming directly from Freddie Mac who along with Fannie Mae is one of the GSE’s or Government Sponsored Entities who are in charge for creating loan requirements and guidelines that lenders must follow. If you look at this from a historic standpoint against the 2017 Interest Rates Falling, the year of 2016 had an average rate of 3.65% which was among record lows for an entire year. Even a year ago, the first week of January 2016, the rate was 3.97% so no too much lower than it is currently. For the group of people out there tracking the 15-year mortgage rates, the average rate decreased 11 points from 3.55% to 3.44%. If we take this and put it into perspective, with the average rate on a year year mortgage decreasing 0.12%, on a $250,000 mortgage you would save $17 per month. Now it might now seem like a lot, but over the course of years, it can definitely add up.
Now a subject we haven’t touched on about the 2017 Interest Rates Falling are some of the trends and bets that are happening that had been driving rates up. The basic premise that was driving rates up was the pushing higher of the yield on Treasury Bonds. Now if you don’t know, Treasury Bonds or T-Bonds are U.S. Government debt security with maturity dates of 10 years or more. Since these are issued by the government they are nearly risk-free as the fear of default is extremely slim. The thought with the new president-elect is that the plans for tax-cuts and infrastructure spending on roads, bridges, and airports. Doing this will hopefully drive up economic growth and inflation which can support the rise in T-Bonds and interest rates.
With the recent 2 months of interest rate increases this has had a negative impact on the mortgage market as applications for mortgages have shown signs of decline in a push-back by borrowers who are not comfortable with the ever increasing mortgage rates. A lot of other borrowers may just be buying their time in hopes that the market corrects itself or keeps coming down towards the 4% mark. If borrowers wanted to see a mortgage rate that was evident prior to the elections, they would be forced to purchase points. Now when you buy points, what you are doing is buying down the rate on your mortgage. 1 point is equal to 1% of your of mortgage amount and reduces your rate by 0.25%. For example if you wanted to reduce your rate from 4.50% to 4.00%, you would have to buy 2 points. On a $200,000 mortgage, this would cost $2,000 per point or $4,000. If you are interested in taking advantage of the decreasing mortgage rates, you need to reach out today at 888-900-1020, email at firstname.lastname@example.org, or inquire for a loan at www.loanconsultants.org.