The average U.S. rate for a 30-year fixed mortgage rose from 3.82% to 3.84% this week according to the latest Freddie Mac Primary Mortgage Market Survey. Interest rates are still significantly lower than last year compared to 4.57% in June of 2018. And in December of 2018, mortgage rates reached 4.64% with many real estate experts predicting 2 or 3 more increases in 2019. Instead, rates have dropped below 4% and haven’t been this low since September of 2017 when rates were 3.81%.
See Previous Predictions for 2019: Michigan Mortgage Expert Lists 3 Trends to Watch for in 2019
So what do these interest rates mean for buyers and the overall housing market? Rochester, MI mortgage lender, Julie Krumholz explains.
What Do Lower Mortgage Rates Mean for Buyers?
Simply put, interest rates determine how much it will cost to borrow money. Most buyers don’t realize that even a small decrease in rates can significantly increase their buying power and save them thousands of dollars on a mortgage.
For example, buyers who were shopping for homes last summer may be able to expand their search into different zip codes or purchase a larger home for the same monthly payment they were looking at last year for a home with less value.
This is especially helpful to first time buyers today, considering the shortage of starter homes on the market. With more purchasing power, first time buyers can afford to search for homes that are priced higher than the average starter home.
How Do Lower Rates Affect the Real Estate Market?
So what do these lower mortgage rates mean for the housing market overall? Lower interest rates will typically encourage more buyers to get into the market. This could result in more bidding wars, especially with the shortage of homes on the market, only increasing the current seller’s market.
With more people likely to buy a house, this may also pressure home prices to increase. There is no guarantee that prices will rise but generally, when rates are low, assets like real estate will increase. When rates are high, it will pressure assets to decrease.
Should Buyers Search for a Home Now or Wait?
Buyers are often contemplating when it is the best time to get into the real estate market. Should they wait for interest rates to decrease further? Should they wait until there is more inventory available? Although we can never predict the future, with mortgage rates currently at a one year low and hovering a two year low, this summer may be the perfect time to shop for a home.
If you are considering getting into the market this year, you should start looking now. With several buyers expected to flood the market there may be multiple bids on properties. Be prepared to be patient and expect that it may take longer to lock in an offer. Buyers with children of school age will want to start looking as soon as possible so they can settle in a new home before the new school year, especially if you will be relocating to a new community.
About Rochester, MI Mortgage Lender , Julie Krumholz
Julie Krumholz is a mortgage lender serving Rochester and the entire state of Michigan with over 30 years of experience. She has worked in underwriting, quality control, processing, closing and loan origination. Her extensive background allows her to advise borrowers with unusual expertise.
If you are looking for a mortgage lender in Rochester, MI to help you navigate through the home buying process, contact Julie today by calling: 586-382-5482.
