What’s going on with Falling Interest Rates??

    Is now the best time to act on Falling Interest Rates???

The headlines agree mortgage interest rates have dropped substantially below initial projections.

Are you one of the many who are considering purchasing a home or moving up to their dream home??

Let’s take a minute and review what’s happening in our market right now and draw some conclusions about market timing in 2015…

A recent article on the Economists’ Outlook blog by the National Association of REALTORS® (NAR) provides insight into one major factor in the decline in interest rates, the price of crude oil.

“As of January 5, 2015, the U.S. Energy Information Administration (EIA) reported that the price of regular gasoline was $2.20/gallon, the lowest since gas prices peaked to about $ 4/gallon in May 2011.”

You may have noticed that filling your gas tank has become substantially less expensive in recent months. The average in Westfield is $2.05, not long ago we were looking at more than double that price!  The average US household is projected to save around $550 in 2015.

So what’s the connection to Interest Rates?

“Lower oil prices mean lower inflation rate, which pushes down mortgage rates.”

Based on Freddie Mac’s weekly mortgage survey as of January 22, 2015, the 30-year fixed rate averaged 3.63% and the 15-year fixed rate averaged 2.93%.

Primary Mortgage Market Survey

“The decline in oil prices is generally positive to households by way of the gas savings and lower mortgage payments. That savings will boost consumer spending in other areas.”

How long will rates stay low?

No one really knows how long oil prices will continue to support low mortgage rates. In a New York Times article, the author points to the fact that “adding hundreds of billions of dollars to consumer spending” could start to have a “counter effect” on rates as the economy continues to strengthen.

So what’s the conclusion:

Don’t wait too long

The low interest rates we are currently experiencing are not going to stay around forever. The current projections from Freddie Mac, Fannie Mae, NAR and the Mortgage Bankers Association all agree that interest rates will increase to between 4.3-5.4% by the end of 2015.

Interest Rates 2015 | Keeping Current Matters

The NAR reports: “At the median home price of $205,300, a 0.75 percentage point drop in mortgage rates will yield savings of about $1,000 annually.”

If you are in a position to buy a home make sure that you meet with a local real estate professional with their finger on the pulse of what’s going on in the market. Don’t let a delay in purchasing impact your family’s financial future.

To learn more about your local market or discuss this article please feel free to contact me!

Tori Denton, REALTOR®

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