Mortgage rates hit a 6-month low: is it worth buying now?

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Mortgage loan rates have been at a competitive level since mid-2020, and although they have grown slightly compared to the second half of last year, they have nevertheless remained attractive. But last week, the 30-year mortgage rate fell to a six-month low of 3.01%. Meanwhile, 15-year mortgages set an all-time low with an average of 2.36%.

No wonder it caused a splash refinancing activity. Mortgage refinancing applications rose 9% over the previous week. But applications for mortgage new home purchases fell 2% over the week.

The main reason for this decline is that the housing stock at the national level is extremely limited. In other words: more people would probably apply for a mortgage if they found affordable homes to buy. But because home prices are so high and stocks are low, the drop in rates did not spike mortgage applications.

Should you buy a home today?

In terms of mortgage rates, this is undoubtedly a good time to buy a home. But while today’s rates are low, they are not necessarily low enough to offset higher house prices. In May, housing prices increased by 17% compared to May 2020, according to the Freddie Mac House Price Index. This is the highest growth in 12 months in the history of the index, which dates back to 1975.

In addition, the lack of inventory leads to even greater price increases. Buyers often find themselves in bidding war in an attempt to capitalize on today’s mortgage rates by offering to pay more for the house until other buyers eventually give it up.

But bidding wars affect not only their subordinate homes, but the entire housing market. If a home listed for sale for $ 400,000 sells for $ 450,000 because a tender war raised its price, the next seller in the same market is more likely to list their home for $ 450,000 rather than $ 400,000 after seeing that buyers are willing to pay that price – hence a vicious circle.

So while mortgage rates are attractive right now, you might be better off waiting to buy a home until the end of this year or 2022. stay low before the end of this year and probably until next year.

If you already own a home, now is a good time to refinance your mortgage. While refinancing rates tend to be slightly higher than rates for new mortgages, the offers available today are definitely worth checking out. Refinancing can result in a much lower monthly payment, especially if you have a strong credit rating this will help you get an excellent grade.

Historic opportunity to potentially save thousands on mortgages

Interest rates will likely not stay at multi-year lows for much longer. That’s why taking action is critical today, whether you’re looking to refinance and cut back on your mortgage payments or are ready to pull the trigger when buying a new home.

Our expert recommends this company find a low rate – and he himself used the refi (twice!). Click here to find out more and see your assessment.

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