There’s nothing like summer to break up a good routine, especially if you have school-age kids like I do. But summer is more than half over now and we’re transitioning into the fall, which is typically second only to the spring market in terms of activity and prices.
There’s a lot going on in the news these days, but I know right where to begin: mortgage interest rates have taken a steep dive. In fact, mortgage rates are now, today, the lowest they’ve been in well over a year, with the 30-year fixed rate mortgage available today for an average of 6.125%.
It wasn’t that long ago that rates were bumping up around 8%, so to be back down in the low-6’s is really something.
Common wisdom says rates cratered because of the “weak” July jobs report – with only 114,000 new jobs creatd and a jump in the unemployment rate to 4.3%. Whereas weeks ago the pundits had been breathlessly reporting that the ecomony appeared to have achieved the rare “soft landing,” the talk today has turned yet once again to the possibility (nigh certainty?) of a looming recession.
It is very worth noting that mortgage rates plunged not becuase of any action the Federal Reserve has taken. In fact, at the recent July meeting of the Federal Open Market Committee, they voted to keep their interest rate unchanged, while hinting at a possible rate cut at their September meeting.
In reality, mortgage rates go up and down based on a number of factors, and the Federal funds rate is but one of them. Here are some other things that affect mortgage rates:
- Rate of inflation
- Market conditions
- Housing construction supply, demand, and costs
- Consumer spending
- Stock market
- 10-year Treasury yields
- Current economic conditions
- Current employment rate
If you review this list, you’ll see that there are a whole number of reasons, beyond the bump in unemployment, contributing to these improved mortgage rates.
Mortgage lenders are peering into the future and are betting that the Fed will in fact be lowering their interest rate – possibly even with an emergency rate cut before their next meeting in mid-September.
And now, the stock market has taken a tumble, and financial markets across the world are apparently roiled, all rooted in worry about the strength of the US Economy. Or maybe it’s the strength of the US Dollar, which motivated the Bank of Japan to raise it’s mortgage rate for the first time in 17 years.
Whatever the cause of the current market turbulence, it’s spelling good news for homebuyers, who will now enjoy a surge in purchasing power.
And that is also good news for homeowners looking to sell, as these lower rates are quite likely to bring buyers into the market, keeping prices up as we move into the vaunted fall market.
If you’re thinking of selling your home this fall, indications are that it could be a very great time to do so. Feel free to give me a call, any time, to talk it over!
Hate to wait?
Silicon Valley Luxury Homes for Sale
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