When mortgages are cheap, they are considered a blessing to the housing market. Lately, a significant drop in the mortgage rates has not been a blessing, if one look closely, you will see that mortgage rates are on the decline since late last year. The rates, consumer borrowing cost, are all affected by government bonds which fell considerably this year. Same goes to the 30-year fixed mortgage which is currently 3.75 percent as at last week, according to Freddie Mac. Looking at the last 30 years, 6.25 percent has been the average mortgage rate, and it was expected that the present rates will ignite home purchase and will stir up refinancing. And due to the rise in home prices, there has been no increase. Sales of homes built newly are below their peak in 2017, as at June investment of residential buildings and already existing homes had also declined by at least 2 percent. Still, all over the country, the gain of the housing market has reduced, along with borrowing costs- as home prices climb its peak. The dull response to lower mortgage rates shows the challenges the federal government faces. These low rates fuel lift stock, bond markets, borrowing by consumers and corporations and corporate confidence, all which gives an upper hand to the American economy. About 10-12 years of America’s economic recovery, the interest rates are low and stock and bond prices are high. Most corporations can’t even find a place to borrow money due to financial conditions. Priya Misra, Head of global rates strategy at TD securities in New York, says “financial conditions are just easy all-around”. Priya says- “so it’s not clear what a cut can do.” The housing market is one of the Fed’s weapons to influence the economy, it brings about sales of appliances & furniture, landscaping services and employment, i.e. construction-wise, all these increases the economic effect of the home’s price. June 2009, the median price of homes (existing) rose to almost 60percent, which exceeds the 24 percent gain in median earnings. This means that the housing market is unaffordable, and it will take more than cutting percentages off the mortgage rate to rectify such inflation.
Homebuilders, since 2008, construct extravagant homes which are futile to them, even banks create loose lending standards to get people to pay higher, and all this has resulted to the decrease in home purchase and ownerships by a good 64 from 69 percent. For a $286,000 home, the drop leading to 3.75 percent has cut off about $160 monthly mortgage payment. And a notable increase in refinancing mortgages and home purchase has increased a bit as at early last year. This drop possibly increases the gain of the housing market, although there has been no positive response from the market. How to Get the Best Mortgage Rates Mortgage rates change daily, depending on the borrower’s situation. Below are a few tips to finding the best mortgage rates.
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