Mortgage interest rates have been dropping lately due to weaker than expected economic data. I really don't think anyone expected that rates would drop again, but they have. Right now rates are about a half point lower than they were at the start of the year. That helps when it comes to buying a home - it increases your purchasing power. Add to that an increase in equity in most areas and those that couldn't refinance before, may be able to now.
So what is happening with interest rates? September retail sales dropped 0.3% from August, which was less than expected. Retail auto sales dropped 0.2%, below the expected increase of 0.3%. The Empire State regional manufacturing index declined. September PPI (Producer Price Index) fell 0.1% from August and was below the expected increase of 0.1%. All of this helps to keep interest rates stable to slightly decreasing, not really what many had expected for this year.
Many had expected interest rates to climb, many thought we would be over 5% by this time. The Federal Reserve was ending their third round of quanitative easing, so rates were expected to increase. What happened? There was continued economic issues around the world. In the beginning of the year, China and Europe were showing signs of economic weakness and has the year progressed, so have those fears. Add in political events with Russia and Ukraine and ongoing conflict with Palestine and Israel, and Syria and Iraq. The growing concern about the Ebola virus and it's potential to cause more economic disruption.
All of these push investors toward safe haven assets such as US treasuries, that helps to keep interest rates low. No one expected our inflation rate to stay as low as it as, so that also helps interest rates.
All this being said, no one really knows how long this will continue. Rates can go up or down very quickly, so it helps to be prepared. If you are looking to buy a new home, know that while rates are fantastic today, tomorrow something could happen to cause interest rates to jump. All it would take is a quick change - maybe a month of great economic reports and suddenly interest rates may be up a half point.
This is a great time to use the current interest rates to buy a new home or maybe refinance your current home! You can definitely buy more home today than you could a month ago. Talk to your lender about what you can do, talk to your realtor about what is available to buy. Then decide what is best for you!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, NMLS#150953 - Email - Website