Is An All-Time Low Rate In Reach? Trends Suggest The Answer Is…


We may be rehashing the same topic as last week, but as a lender there’s simply nothing bigger going on than the impact Brexit is having on markets around the world, including mortgages in the United States. Rates took another step down this week, getting closer and closer to the all-time low.

Fannie Mae reported on Thursday that the average 30-year fixed rate mortgage has fallen to just 3.41 percent, breaking last week’s record for the lowest point of 2016 (and getting crazily close to the lowest of all time). Rates were at the lowest point in U.S. history during September of 2012—the impact of Hurricane Sandy combined with a faltering stock market—reaching 3.31 percent.

Is it possible that we could see that record broken soon? Some say yes.

“Mortgage rates right now should be at least 3.25 percent, if not lower,” said Guy Cecala, publisher of trade publication Inside Mortgage Finance.

So, uh, why aren’t they? Banks are being a tad stingy about passing on the low rates. Mortgage rates typically rise and fall in correlation to 10-year Treasury yields. The Wall Street Journal took the average level of difference between the two across the last decade and determined—if things were actually in sync—today’s mortgage rate would be closer to 3.17 percent.

That said, borrowers aren’t exactly doing badly. A rate of 3.41 percent looks pretty darn good when compared to 3.56 percent just two weeks ago, and especially when compared to 4.04 percent a year ago.

Is it possible for things to go lower? Last week we were a tad conservative in hedging our bets, wondering if the rapid drop was just a knee-jerk reaction to the Brexit vote. Another drop of nearly the same size suggests that things are going to go down before they go up. Down far enough to crack that 3.31 percent record?

We’ll get crazy and say “yes.” It won’t be next week but in perhaps two weeks.

One thing we will definitely guarantee: You won’t be seeing a rise in the Federal interest rate as nearly as we expected as recently a month ago. At that point, neither The Fed nor even the United Kingdom could have guessed that Brexit would occur. Now we all need to take some times and get things figured out.

In the meantime, if you’re considering buying a property, now would be the time to do it.

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