Mortgage rates have plunged to start 2016, a surprising twist that could be a big boon to buyers.
The drop could lead to a rush on houses this spring with borrowing costs so low. Rates on a 30-year fixed rate mortgage dipped to 3.62 percent, close to a record and below the 4.01 percent rate in December, according to a Tribune-Review report.
The numbers are based on a weekly survey by mortgage lender Freddie Mac.
It’s a big surprise for industry experts who thought mortgage costs would start rising after the Federal Reserve boosted its baseline interest rate at the end of last year. However, that hasn’t been the case so far in 2016.
Experts think that the ups and downs of the stock market in 2016 might be keeping rates down.
With lower rates in place, buyers are able to buy more expensive homes, and renters could accelerate plans to buy a home for the first time, leading to a stronger housing market.
These realities certainly have manifested themselves in terms of available housing as people snap up homes on the market. Housing inventory at the end of January saw a decline at 2.2 percent lower compared to the same time last year. The amount of homes on the market might not be enough to keep up with the demand.
“Yields on the 10-year Treasury continued their downward trend this week after a small rally the previous two weeks,” said Sean Becketti, Freddie Mac chief economist, in a statement. “The 30-year mortgage responded, falling 3 basis points to 3.62 percent. Since the beginning of 2016, 30-year rates have fallen almost 40 basis points helping housing markets sustain their momentum into this year. Earlier this week, the National Association of Realtors announced existing home-sales were up 4 percent month-over-month in January and up 11 percent from last year.”