Over the past few weeks, the average 30-year fixed mortgage
rate from Freddie Mac fell by half a percent. The drop happened over concerns
about a potential recession. And since mortgage rates have risen dramatically
this year, homebuyers across the country should see this decline as welcome
Freddie Mac reports that the average 30-year rate was down
to 5.30% from 5.81% two weeks prior (see graph below):
But why is this recent dip such good news for homebuyers? As
Nadia Evangelou, Senior Economist and Director of Forecasting at the National
Association of Realtors (NAR), explains:
“According to Freddie Mac, the 30-year fixed mortgage
rate dropped sharply by 40 basis points to 5.3 percent. . . . As a result, home
buying is about 5 percent more affordable than a week ago. This translates to
about $100 less every month on a mortgage payment.”
That’s because when rates go up (as they have for the
majority of this year), they impact how much you’ll pay in your monthly
mortgage payment, which directly affects how much you can comfortably afford.
The inverse is also true. A decrease in mortgage rates means an increase in
your purchasing power.
The chart below shows how a half-point, or even a
quarter-point, change in mortgage rates can impact your monthly payment:
If your home doesn’t meet your needs, this may be the
opportunity you’ve been waiting for. Let’s connect to see how you can benefit
from the current drop in mortgage rates.