If you were debating a spring home purchase or deciding on refinancing your Triangle area home, now might be the time to lock in your mortgage rate.
That’s because the average mortgage interest rate has fallen this week, after rising for much of February 2022, according to the Primary Mortgage Market Survey® from Freddie Mac.
Nationally, the average rate for a 30-year fixed mortgage fell to 3.76%, down 0.13% from last week, though still nearly three-quarters of a point higher than at this time last year.
Average rates for a 15-year fixed mortgage are also down 0.13% from last week, and were found to be 3.01% as of the release of the survey today.
WRAL TechWire also reported today on new data from ATTOM Data Solutions that showed that there were more than twice as many Triangle homeowners who opted to refinance an existing mortgage than those who initiated a new mortgage due to a new home purchase in the period following the onset of the global coronavirus pandemic through the end of last year.
Since pandemic began, 2x more refinances than new home loans in Triangle
What’s happening?
According to Freddie Mac, the global geopolitical tensions resulted in many investors moving capital to “the safety of bonds, leading to a drop in mortgage rates.”
“While inflationary pressures remain, the cascading impacts of the war in Ukraine have created market uncertainty,” the Freddie Mac summary reads. “Consequently, rates are expected to stay low in the short-term but will likely increase in the coming months.”
Rates are expected to increase as the Federal Reserve raises interest rates, which could be coming soon. One Federal Reserve Governor noted last week that a half-rate hike could be possible, though many expect a quarter-point increase will be considered.
Recession coming? Odds go up as Fed moves to raise interest rates
Now may be the time to ‘lock in’
Meanwhile, median home sale prices continue to increase in the Triangle. Data obtained by WRAL TechWire from the Triangle Multiple Listing Service database show that the median price of residential property increased slightly in February 2022 compared to January 2022, and is now at $435,000.
When rates increase, home affordability diminishes for some would-be homebuyers. Economists at national real estate brokerage firm Redfin found that a rate increase from 3.55% to 3.9% would cause a would-be homebuyer to lose $13,750 in purchasing power—at a time when home values are increasing.
And though homes considered affordable are coming on the market at an increasing pace, demand for those homes remains incredible high, as this viral video from last month shows.
“Interest rates going up, people typically think about the monthly payment, in terms of how much they’re actually paying,” said Nicole Bachaud, a Zillow economist, in an interview last month with WRAL TechWire. That can be hundreds of dollars a month, and that can change an individual’s ability to buy, or to live in, a home, said Bachaud.
But on the other hand, when interest rates drop, refinancing to a lower rate could provide homeowners a savings of hundreds of dollars in a monthly budget. So now may be a good time to “lock in” an interest rate with a mortgage lender or mortgage broker, as rates may change again soon.
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