As many of you have heard in the news recently mortgage interest rates have been on a freefalling downward trend and that’s boding well for the housing market here on Cape Cod. This helps many first-time buyers achieve home ownership. It also helps those who have higher rates that have not refinanced.
To put things in perspective, we started off 2018 with a 30-year fixed rate around 4.0% (APR 4.12%). Rates peaked in November of 2018 hitting close to 5% - up about one full point in less than 11 months.
Since then rates have back off to the mid 4% range until last week when they headed ever lower.
What exactly is happening?
The Federal Reserve meets roughly 8 times per year at their FOMC meetings. Last week their comments were extremely “dovish” as opposed to previously having a “hawkish” bias.
What is all this bird talk about? “Hawkish” policy is when we have strong economic growth and rising inflation. “Dovish” policy supports lower interest rates, tempered economic growth and occurs when we have turbulence in the economy and the jobs market.
What astonished a lot of folks is the fact that the Fed went dovish on raising rates any further in 2019 and even hinted that they may lower rates in the near future. The double whammy came when they announced that they will be purchasing bonds and treasuries, later this year. This move is generally good for mortgage interest rates.
The moves made by the Fed last week signal concern about the economy, inflation and some of the issues overseas that the US is currently dealing with. Even though the stock market took a hit last week, it was positive for mortgage interest rates.
If for some reason you missed the boat on refinancing, now would be a good time to speak to your mortgage professional.
If you’re in the market to buy a home, lower rates bring about a lower monthly payment and increased purchasing power.