The Mortgage Banker Association said recently that the Market Composite Index, a measure of mortgage loan application volume, decreased 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week.
We can identify three clear trends in the last three years:
- From Aug 2016 to Sep 2017, mortgage rates broke the steady prior period and start moving up and then down
- From Sep 2017 to Nov 2018, mortgage rates had a continuous increase to reach new highs on November 2018, where the demand for home loans, and homes, fell down severely
- From Nov 2018 to Today..! where mortgage rates are coming down not leading new home loans, but reflecting probably less housing demand and therefore home loans.
Many mortgage lenders ask the same question: “How Low Can Mortgage Rates Go?”. The experts are pointing out that the current Fed policy and the US/China trade war have been key players on the current mortgage rates.
To explain better the benefits for borrowers, let me give some examples in plain terms:
- Last year $400K FHA Home Loan monthly payment might be around $1,998 to pay the principal and the interest of the loan. Today, that same loan monthly payment might be $1,741. A saving difference of $257 per month..! The annual saving comes to $3,090. Can you imagine how much you will save for the long 30 years?
- Last year $400K Conventional Home Loan monthly payment might be around $2,067 to pay the principal and the interest of the loan. Today, that same loan monthly payment might be $1,787. A saving difference of $280 per month..! The annual saving comes to $3,361. Can you imagine how much you will save for the long 30 years?
- Last year $800K Jumbo Home Loan monthly payment might be around $3,978 to pay the principal and the interest of the loan. Today, that same loan monthly payment might be $3,637. A saving difference of $341 per month..! The annual saving comes to $4,087. Can you imagine how much you will save for the long 30 years?
Recommendations: If you are thinking of buying a new home, feel free to talk with your lender and fix the rates for 30 days. We are close to reaching a new several-years low..! Investors and homebuyers should be considering this the best moment to get a better loan in the next future years.
Learn more about the current mortgage rates here.