Mortgage rates were their lowest level ever in January of the current year, and they have climbed steadily since then. In March, rates rose above 3%, and then they began dropping again in April. Rates are expected to move higher over the course of the year, which is why many experts are surprised to see current rates dropping below 3%.
Sam Khater, Freddie Mac’s Chief Economist, states that “the combination of low and stable rates, coupled with an improving economy, is good for homebuyers. It’s also good for homeowners who may have missed prior opportunities to refinance and increase their monthly cash flow.”
Khater continues, stating that “this is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity. The higher prices are also affecting the mix of activity, with stronger growth in purchase loans with larger-than-average balances.”
A decline in mortgage rates has many economic causes and implications. The decline in mortgage rates began with recent positive economic news. Favorable sales reports for cars and light trucks in April, coupled with higher factory orders and private payrolls, among a slate of other factors, served as a boost for the economy. The positive economic news precipitated a decline in Treasury yields, and according to George Ratiu, senior economist at Realtor.com, mortgage rates oftentimes move in the same direction as Treasury yields.
Despite the lower interest rates, home prices are beginning to increase. Strong demand due to loosening COVID – 19 restrictions have pushed home prices higher. Ratiu states that “real estate markets continue to see asking prices near record highs, as the favorable financing environment has motivated buyers to keep searching for homes, even amid tight inventory.” The number of sellers choosing to list their home appears to be growing amid loosening COVID – 19 restrictions as well. This environment presents a compelling opportunity to first-time buyers.
Many economists expect the drop in mortgage rates to be accompanied by an increase on the horizon. Matthew Speakman, an economist for the real estate site Zillow, predicts that “this period of relative calm will be put to the test in the coming days. April employment figures and inflation data, two key gauges of the economy’s path forward, are due this week, and stronger-than-expected readings of either — or both — reports will likely revert mortgage rates back upward.” While the reports that Speakman references are U.S. reports, their repercussions are likely to have a similar effect on Ireland’s economy. Furthermore, in the current global economy, one country’s economic data can oftentimes project and inform what is likely to occur in another.
With the economy beginning to heat up, you may want to make the investment into buying a home. At onlineapplication.io, we can help you get the best mortgage rate available. We look forward to seeing you at our site soon!
Information sources: https://www.cnn.com/2021/05/06/success/mortgage-rates-may-drop-feseries/index.html