Historical Lows: Current Mortgage Rates Drop Below Average Norms

Are you a prospective home buyer who's been playing the waiting game, hoping for mortgage rates to dip even lower? It's time to reevaluate that strategy. This week, Freddie Mac reported that the 30-year fixed-rate mortgage averaged 6.6%, which is significantly lower than the long-term average of 7.74%. Moreover, there's an anticipation that mortgage rates will continue to decline throughout the year.

Jessica Lautz, the Deputy Chief Economist at the National Association of REALTORS®, highlights the positive trend in dropping mortgage interest rates. She points out that the current average is the lowest it’s been in eight months, suggesting a favorable environment for home buyers.

Let’s break down the numbers: With the current 6.6% mortgage rate, a typical monthly payment for a $400,000 home (after a 20% down payment) would be around $2,044. This is a monthly saving of $257 compared to the rates near 8% back in October last year. Lautz advises that now is an opportune time for potential buyers, especially as winter is a season for setting financial goals. Cleaning up finances, connecting with a mortgage broker, and finding a REALTOR® could be steps towards achieving a home purchase goal.

Sam Khater, Freddie Mac’s Chief Economist, sees the lowering borrowing costs this winter as a particularly positive sign for the housing market, especially for first-time buyers who are more affected by borrowing costs and housing affordability.

The market is already responding to these lower rates. The Mortgage Bankers Association reported a 9% increase in mortgage applications for home purchases in the latest week, signaling a rise in future homebuying activities.

Freddie Mac provides further insight with the latest national averages in mortgage rates as of the week ending January 18:

• 30-year fixed-rate mortgages averaged at 6.6%, a slight decrease from the previous week's 6.66%. This time last year, the rate was at 6.15%.
• 15-year fixed-rate mortgages averaged at 5.76%, down from 5.87% last week. A year ago, the rate was 5.28%.

With these numbers in mind, it might just be the right moment for home buyers to take action and capitalize on the current favorable rates.