Mortgage rates are on the decline
Yes, mortgage rates are going down and this has sparked an exciting sudden change in the Massachusetts housing market. But who knows for how long? Many prospective borrowers with strong credit were locking their mortgages at the end of last week. Mortgage interest rates change all the time and are influenced by several factors.
What causes mortgage rates to change?
Bond market influence
Bonds have a considerable influence on interest rates. In a strong economy, more people buy stocks and fewer buy bonds, driving down their value and their price. When that happens, the yields must increase so the bond will have the proper payout. In turn, interest rates increase, including mortgage interest rates. So, in a stable economy with a strong stock market, you’ll pay higher interest on your home loan. The opposite is also true.
Other economic influences
Other market factors also affect interest rates. The Federal Reserve, unemployment rates, home sales, and consumer confidence all indirectly play a part in setting interest rates.
Predicting the rise and fall of rates is best left to skilled economists. A recent article by US News predicts that mortgage rates will continue to decline throughout Q4 of 2024 and into Q1 of 2025. As a consumer, you can work with your loan officer to understand the factors that impact rates and put a plan in place to lock when rates hit your goal rate. MEP has a program called Lock to Shop, which can help you lock in a rate as you conduct your home search, and if the rate has dropped significantly once you find your new home, you will have a one-time option to modify to the lower rate. Your loan office can review the details of this program that will protect you as you focus on your home search.
How rates affect your buying power
When rates climb, you may still be able to afford a wonderful home, but the size and desirability of the home you can afford may be decreasing. Your buying power will begin to recede: that is, you will ultimately get less home for your money. Even a one percent rise in mortgage rates will affect your purchasing power. Jumping into the Massachusetts housing market now when rates are lower helps you save money on both the cost of the home and your mortgage loan.
Getting the best rate
Providing you with an accurate rate quote depends on several variables, such as your income and credit score, the type of property and transaction, and the term of the loan and loan size, to name only a few. Our loan team will work with you to help you understand these factors and how they affect your financial future, as well as what steps can be taken to help you find the best available loan. At Mortgage Equity Partners, once you have found your home and locked your loan, you no longer have the risk of interest rates rising. Additionally, if interest rates fall, you can take advantage of our “interest rate float down policy,” which allows us to reduce your rate to a lower rate. It’s a win-win!
Our knowledgeable loan officers are available to discuss interest rates and whether buying a new home is a good choice for you!
Sources:
2024 Mortgage Rates Forecast: When Will Rates Go Down? U.S. News
