Mortgage Rates Drop Good News For Homebuyers

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Buying

 

The Drop in Mortgage Rates Brings Good News for Homebuyers

Homebuyers

 

A half-percent drop in Freddie Mac's 30-year fixed mortgage rates has been recorded over the past few weeks. Several factors contributed to the drop, including concerns about a possible recession. Since mortgage rates have risen dramatically this year, this decline is welcome news for homebuyers across the country.

Freddie Mac reports that the average 30-year rate was down to 5.30% from 5.81% two weeks prior (see graph below):

The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM

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:

The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM

In Summary

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. Get in touch with us today to start your home-buying journey!