WASHINGTON – April 24, 2017 – Mortgage rates dropped below 4 percent last week for the first time since November, just as the crucial spring selling season gets under way. The average rate on a 30-year fixed-rate mortgage dropped to 3.97 percent from 4.08 percent a week earlier; in mid-March, the FRM averaged 4.3 percent.
The drop could encourage buyers put off by recent rising mortgage rates to dive into the market and prompt others thinking about making an offer "between now and the end of June" to enter the market sooner rather than later if they fear rates will rise again.
"We are in the spring, and people are out looking to buy homes," says Len Kiefer, deputy chief economist at Freddie Mac. "These low rates are really going to help out with affordability."
U.S. home prices rose 5.9 percent in the 12 months ended in January, the fastest rate since mid-2014, according to the S&P CoreLogic Case-Shiller Indices. The impact of a decline in mortgage rates of about a third of a percentage point would be relatively small in many areas of the United States, but it would be much more pronounced in high-cost markets.
Under last week's lower rates, monthly mortgage payments would decline by about $90 for buyers purchasing homes worth about $600,000. At the same time, these buyers could qualify for more mortgage money – an amount that could swell by about $25,000, according to Black Knight Financial Services, a mortgage and real-estate technology and data provider.
Source: Wall Street Journal (04/24/17) Kusisto, Laura