After months of falling and hitting historic lows, mortgage rates started rising last week. Given that low-interest rates are a primary driver behind home purchases and mortgage refinancings, is this something borrowers need to worry about?
The mortgage interest rate is the percentage your lender charges you for borrowing money for a home loan. Lower rates let borrowers buy homes they may not have otherwise been able to afford. This is because borrowers pay less for interest, leaving more money to spend on the home’s actual cost. Borrowers also benefit from low-interest rates when they refinance a home or trade out an existing mortgage for a new loan.
Rates began falling in March as the Federal Reserve worked to keep credit flowing to people and businesses during the pandemic. Because of the Federal Reserve’s actions, the average U.S. rate for a 30-year fixed mortgage has hit nine new lows since communities began grappling with the coronavirus.
Last week, the average U.S. mortgage rate for a 30-year fixed mortgage reached 2.9%, up from 2.87% the previous week. The interest rate for a 15-year mortgage was 2.4%, up from last week’s record low of 2.35%.
Housing demand has remained relatively strong in recent months thanks to the low-interest rates. In August, sales of new homes topped 1 million and reached their highest pace since September 2006, according to the National Association of Home Builders. According to the association, sales of existing homes rose to a 14-year high of 6 million at an annualized pace in August.
Low-interest rates are worth taking advantage of, and while rates have risen, they remain below rates reported just a year ago. Last September, interest rates averaged 3.61%. Two years ago, interest rates averaged 4.63% during September, according to Freddie Mac.
Combining low rates with the right lender can be one of the best financial decisions you’ll ever make. Talk to one of Wyndham Capital’s home loan experts today to learn more about how our digital advantage works to your benefit in a time where mortgage interest rates remain among historic lows.