(AmericanProsperity.com) – On Tuesday, the Federal Reserve surprised everyone when it lowered interest rates to an all-time low and increased spending power for potential homeowners.
The unexpected emergency rate-cut was designed to increase economic activity and prevent a slowdown that could dramatically affect the US economy in the face of the coronavirus threat.
Ending the week of March 5, 30-year mortgage interest rates averaged an all-time low of 3.29%. That’s down from the previous week’s average rate of 3.45%. A year ago, the 30-year rate averaged 4.41%.
If you’re looking for a 15-year mortgage, rates dropped to 2.79% from 3.83% a year ago.
Mortgage Applications Increase, but Challenges Still Await Homebuyers
In another positive sign for the economy, mortgage applications last week increased 10% compared to a year ago. All signs point to it not slowing down anytime soon, thanks to the surprise interest rate drop by the Federal Reserve.
It’s clear that the good news is enticing homebuyers. While it may not sound good to say a slowdown in the economy could be good for housing affordability, that’s the reality.
If an economic slowdown were to occur, it could slow down housing prices which have grown significantly over the last number of years.
Affordability is a main concern for Millennials who are expected to account for 50% of mortgages this spring. Inventory for first-time homebuyers is extremely tight and that is keeping prices high for some who want to buy a home.
This may be the best time to buy a home. There’s a question about how low lenders will allow interest rates to go down. With low rates come a high volume of new applicants. Mortgage loan providers don’t have to lower rates further to entice more buyers.
Luxury Home Sales Remain in Tailspin
Luxury homes are one area of the real estate market that may not benefit from the lower rates this spring. There are more luxury homes available in the market than there are buyers.
Another impact on luxury home sales is Chinese homebuyers. Chinese buyers expressed the most interest in luxury homes in 2019, but are currently prevented from entering the United States due to coronavirus. Before the coronavirus threat, trade tensions were playing a role in slower luxury home sales by Chinese immigrants.
If you’re in the market to buy a home this spring, there’s money to be saved and homes to be bought so long as home sale price increases remain under control. There
Mortgage Rates Fall to All-Time Low and More People are Buying Homes
may never be a better time to buy a home.
~Here’s to Your Prosperity!
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