Mortgage Rate Slid Down, How Long Will It Last?

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5.13% mortgage sound too good to be true, well in this case it is true. While the average rate on a 30-year fixed mortgage stood at 2.86% a year, the current 5.13% (rates does change daily, Monday Friday) is a lot better than the June rate of 5.81% which was the highest rate since 2008. There is no denying that rates have jumped this year and will most likely continue to do so due to the Federal Reserves decision to increase rate to contain inflation. Lets take a brief look at five factors that affect mortgage rates. They include but not limited to:

  1. Inflation This erodes the purchasing power of dollars
  2. Rate of economic growth Economic growth equal higher wages and greater consumer spending, including applying for mortgage loans to buy homes. This is good. However, in a slowing economy, the opposite occurs. That is, you guessed it, bad.
  3. Federal reserve monetary policy Although the Federal reserve does not set the specific mortgage rate, its actions in adjusting the flow of money up or down does impact the interest rates available to people borrowing money.
  4. The bond market Whenever the 10-year Treasury yields rise, as it has been recently, mortgage rate will rise, this is so because fixed mortgage rates follow the 10-year Treasury yields.
  5. Housing market Condition in the housing does affect mortgage rates. For example, a decline in the housing market does tend to push rate down.

Now, just in case you were wondering, it would stand to reason that the best time to get a fixed-rate home loan such as an FHA loan is when the Treasury yields are low. Not for or against it. You decide. Also, while deciding, remember, your credit scores does impact your mortgage rate as well. As always, thank you so much for reading. Until next time Diana

Source: US Department of The Treasury

Source Wall Street Journal Pro

Image Created and Design by Diana Walton for Astor & Eaton Realty

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Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the HRIS.
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