Surprise! Rates Only Getting Lower After Fed Stays in Neutral

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Last week we suggested that The Fed had set us up for a run of low mortgage rates and we weren’t wrong: The average lender is currently offering the lowest rates of the past two months, coming in or around 3.375 percent on a 30-year fixed rate loan.

The big news last week was The Fed’s announcement that it still wasn’t confident enough in its numbers to justify a rise in the Federal interest rate. That surprised few, as the economic body has balked several times during 2016 after previously suggesting that we may see multiple rises during the calendar year. Now, the earliest plausible rise may come during December, and lenders are feeling alright about keeping things low.

Although today’s rates are the lowest they’ve been in two months, that’s not exactly earth-shaking news. After all, we’ve been sitting in a record-setting period of stasis, where rates have simply refused to spike up or down—resulting in rates between 3.375 and 3.5 percent for nearly half a year. The past two months have tended toward the higher end of that spectrum as we briefly considered that perhaps Chairwoman Yellen would finally push the button…which has now fallen through. Rates have fallen for five consecutive days as of September 28, suggesting that the trend will be on the lower side of things for at least a few weeks.

That begs the question: Who’s still around to reap the benefits? Despite the good news for buyers and borrowers, refinance applications are actually down .7 percent week-to-week after The Fed’s announcement. As you might expect, lower rates typically drive applications up.

And, as has been the case with similar statistics during 2016, everything is relative. Refinance applications may be down relative to last week, but they’re significantly heightened relative to last year. This week’s numbers are 34 percent higher than the same period during 2015. The same applies to new mortgage applications, which are up 10 percent year-to-year for the current week.

In short, many got the deed done early, not anticipating better opportunities during 2016. If you haven’t applied for refinance or a brand new mortgage yet, but see yourself doing so soon, the next month may be the time to do it.