Will Mortgage Interest Rates Continue Falling?

When Freddie Mac started surveying lenders in 1971, 30-year fixed-rate mortgages were between 7.29 to 7.73 percent. In 1974 the annual average rate of inflation began increasing – to a rate of 9.5 percent by 1981.

To contend with inflation the Federal Reserve increased the federal funds rate, (the overnight rate at which banks borrow and lend to each other), resulting in an all-time high mortgage interest rate of 18.63 percent in 1981.

After a while the Fed’s strategy worked, and inflation went back to normal levels by October 1982. Accordingly, home mortgage rates remained primarily in the single-digits for the next couple decades. Mortgage rates further declined, dropping as low as 3.31 percent in November 2012 — the lowest in the history of mortgage rates, until now.

Currently mortgage interest rates are at historic lows. The 30-year fixed-rate mortgage averaged 3.28 percent during the week ending May 14 as reported by Market Watch. And according to Freddie Mac, rates are expected to hover around 3.8 percent.

The decline in rates has significantly affected buyers’ ability to afford homes. For instance, borrowing $250,000 at 3.5 percent costs $144 less per month than at the 4.5 percent rate from one year ago.

Rate watchers are keeping a close eye, trying to determine if now is the time to jump or if they should wait longer in hopes of getting even deeper discounts. The majority of experts anticipate rates will stay at these low levels for many weeks and probably months to come, but are not anticipating a drop.

Regardless of where they go from here, right now they’re the lowest we’ve ever seen. So, does it make sense to wait for lower rates? Potential buyers who may be waiting for a better rate should carefully consider risk vs. reward.

The truth is, no one is sure how this situation will play out, rates could go lower. But it’s also possible the economy could recover quickly, and a post-quarantine boom could follow, which could cause mortgage rates to rise quickly.

If you are on the fence about buying this summer, it’s still a good idea to get pre-approved now. Countless home buyers were unprepared the last time rates nose-dived. Many were scrambling to apply and lock in hopes of capturing the ultra-low rates – which were only around for a few days.

Whether you decide to buy a home this year or wait, it’s a good idea to be as informed as possible. Realtors may not be able to predict what the rates will be, but they will make it their mission to help you make enlightened choices that work best for your family.

Partnering with a local real estate expert with the right tools, resources, and connections to guide you proficiently and prudently can make a vast difference in your experience as well as the outcome.

The number one independent real estate firm in Colorado Springs, The Platinum Group Realtors, delivers experienced, knowledgeable Realtors dedicated to quality customer care with the utmost honesty, integrity and attention.

For a no-obligation consultation, call today: 719-536-4478 or visit PlatinumHomeSales.com

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