Mortgage Rates See 2017 Low

The U.S. saw all-year low for 30-year mortgage rates in August—the benchmark low rates since November 2016. Low mortgage rates are correlated with stagnantly low inflation, which is allegedly keeping some mortgage lenders on-edge.

30-year Fixed-Rate Mortgage

August was hit with the nine-month low for 30-year fixed-rate mortgages at an average 3.86-percent, but this was an increase from the year-over-year 3.43 percent and the 2016 all year average of 3.65 percent.

August also hosted a stagnant 15-year fixed-rate mortgage average of 3.16 percent and a slightly increased 5-year Treasury-indexed adjustable-rate mortgages average of 3.17 percent.

The 30-year mortgage rates and 10-year Treasury yield shared a declining trend where the 10-year Treasury yield dropped to 2.17 percent from 2.23 percent only one-day post-President Trump threatening a government shutdown in late August. Luckily the 10-year Treasury yield is now on a slight incline.

Mortgage Rates and Political Uncertainty

Government affairs can affect the housing market. Government bonds have remained strongly sought after, and inflation continues to be obstinately low.

In August and September, mortgage rates trended down, and it can be correlated with political happenings. In a time of political uncertainty, lenders, investors, and world banks remain apprehensive about an imaginable government shutdown.

The political environment is a top influencer of real estate trends. With tax reform efforts lingering, we may see further fluctuation in housing starts, market dynamics, and financing including mortgage rates and fees.

Mortgage Rates and Fees

A low mortgage rate is always appealing to an aspiring homebuyer. Freddie Mac conducts a country-wide lender survey twice each week to calculate the current average mortgage rates. Not included in the weekly mortgage rate update: associated fees.

Though not as headline-worthy as the “all-year low mortgage rate,” additional mortgage loan fees exist. Mortgage loan fees are termed “points.” One mortgage loan point is equivalent to one-percent of the mortgage loan amount. The number of points the lender sets is the amount the borrower must pay to receive the lowest possible mortgage rate.

On average the fees for a mortgage are around 0.5 point—the 30-year mortgage fees increased slightly from 0.4 points to 0.5 points, and the 15-year mortgage is steady at 0.5 points.

Low Mortgage Rates and the Economy: Home Sales Fall

Generally, when inflation is low and stays low for a long period, consumers postpone purchases with the assumption they can make the purchase later at the same low price. We are seeing this situation with the housing market.

At a time of record-low mortgage rates, many potential homebuyers still aren’t making purchases. Despite the stagnantly low mortgage rates, homebuyers are deterred from purchasing a home due to additional factors like the shortage in market supply and soaring housing prices.

Home sales have now plummeted to their lowest level this year.

There was a decrease in existing home sales by 1.3 percent month-over-month and a 2.1 percent increase year-over-year. For now, as market supply continues to trend down with mortgage rates, home purchases will slow.

Mortgage Rates in Massachusetts Rising

With fall underway, the nation, including Boston, is now seeing rising mortgage rates.

Near the end of October 2017, Massachusetts mortgage rates were on an incline with 30-year fixed-mortgage rates up by 0.08-percent to 3.92-percent. 15-Year fixed-mortgage rates in Massachusetts were also up by 0.07-percent to 3.13-percent.

As October comes to a close, the average 30-year fixed-mortgage rate is 3.768-percent in Boston. Other data, like a national large mortgage lender survey, indicates that the current average standard-30-year fixed-rate mortgage is a bit higher at 4.02-percent.

With current politics influencing the persisting low inflation rates, and the tight not-so-buyer-friendly housing market, housing sales have been down. Now, with mortgage rates on the rise in Boston, we may see aspiring homebuyers beginning to take action while rates remain relatively low. Also, with increasing mortgage rates, home appreciation rates are known to taper. The average home selling price is reportedly down 9-percent from august. This will benefit many buyers by making homes relatively more affordable.

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