Low Interest Rates Keeping Homes Affordable!
Many buyers underestimate the benefits a good home loan interest rate can provide them. For example, on a $200,000 loan, an increase in just one percentage point from 3.75 to 4.75 means paying over $100 more per month and over $40,000 more in interest over the life of the loan. Compared to 1 year ago, mortgage rates are already .375%-.625% higher nationally.
Also, when the economy is slow and the stock market down, investors tend to move money out of stocks and into Mortgage Bonds which are considered safer investments. This causes mortgage interest rates to go down. When the economy rebounds and stocks rally, investors direct their money back therein. As a result, mortgage interest rates go up.
We have been experiencing a well performing stock market despite other sectors of the economy remaining modest, such as inflation, consumer spending, and jobs growth. Even within this realm of volatility, interest rates still hang in historically low territory.
Amidst a heightened seller’s market and increasing home prices, low interest rates continue to be good news for homebuyers considering purchase. However, any positive economic news, which could be spurred by another federal interest rate hike, may provide some headwinds for Mortgage Bonds and home loan rates during the remainder of 2017.