Just about everyone expected mortgage interest rates to rise in 2019. But after reaching 5% last November, the average 30-year mortgage rate is back in the 3% range, the lowest it has been in over 2 years.
This latest development is welcome news not only to homeowners who are looking to refinance, but also to prospective buyers and sellers. Here’s why:
3% is a steal – While 5% may have seemed high last year, that was still low by historical standards. To put things in perspective, rates were in the double digits during the 1970s and ‘80s, and were in the 7 – 8% range in the 1990s. Now, with rates even lower, there’s a big window of opportunity for today’s buyers.
More buying power – Lower mortgage interest rates allow buyers to afford more house for the same monthly payment. At the same time, it means buyers can score significant savings. Take a look at this chart to see how rates affect your monthly payment:
|Monthly principal & interest per $100,000 borrowed|
|Loan amount with $2,000 monthly principal & interest|
Courtesy of Guaranteed Rate
Larger pool of buyers – When the rate environment is favorable, it also creates opportunities for sellers. That’s because there are more qualified buyers who may be looking to take advantage of the recent drop in rates. And with more buyers in the marketplace, it’s an opportune time for sellers to make a move as well.
For more information about how this impacts your buying or selling strategy, contact an agent.