Talk about good timing: We’re in the middle of homebuying season, and mortgage rates are at their lowest since March.
The 30-year fixed-rate mortgage averaged 6.67% in the week ending July 18, down 10 basis points from the previous week’s average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point. The week’s average rate was the lowest since the week ending March 14.
Rates follow inflation downward
Interest rates tend to climb when overall prices are rising fast, and rates tend to settle lower when prices are stable. Your grocery receipt tells the tale — inflation has been uncomfortably high for years. The good news is that in June the consumer price index dipped below 3% for the first time since March 2021. It was barely below 3% — it clocked in at 2.97563% — but a win’s a win.
As inflation cools, it pushes mortgage rates in the right direction. The 30-year mortgage has fallen a little more than a quarter of a percentage point in the last two weeks. On a $400,000 loan, the resulting rate difference amounts to savings of $72 a month.
The busiest time of the year for home sales is May through August, and this week’s rates are the lowest of this homebuying season so far. The rate relief might be sufficient to motivate some buyers into making offers — if they can find suitable homes at affordable prices. The inventory of for-sale homes has been growing this year, but buyers still have fewer places to choose from than they had before the pandemic.
For some, it’s a refi opportunity
The decline in rates hasn’t set off a homebuying frenzy, but it has prompted plenty of people to refinance, according to the Mortgage Bankers Association. Refinances jumped 15% in the week ending July 12. “While FHA and VA refinance applications accounted for a significant share of the increase, these are likely recently originated loans with even higher than current offered rates,” MBA deputy chief economist Joel Kan said in a news release.
Indeed, rates hovered above 7.5% last October and into early November. Refinancing could be attractive to someone who got a mortgage back then. On a $400,000 loan, the monthly payment at this week’s rate average of 6.67% is $224 less than on a loan with a 7.5% rate. If you got your mortgage last fall, it’s probably not too soon to refinance.
A mortgage refinance calculator can help you run the numbers.
The article Weekly Mortgage Rates Sink to 4-Month Low originally appeared on NerdWallet.
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