For the second week in a row, mortgage rates across the country continued a downward trend that have now left them at the lowest seen so far this year according to CNN Money. Rates on a fixed 30-year mortgage are now sitting at 4.21 percent, which is down from last week’s which saw mortgage rates drop to 4.29 percent. Currently fixed 15-year rates are at 3.32 percent, also down from last week, which was 3.38 percent. Mortgage rates have begun to drop over recent weeks despite the predictions of financial analysts who believed rates would continue to rise throughout 2014, and those experts predicted earlier in the year that we could see mortgage rates as high as 5 percent or more by the end of the year.
Treasury bonds can be linked directly to the recent drop in mortgage rates, as a weaker than expected US economic recovery coupled with global unrest have combined to create the lower than expected rates on home buying. On top of those factors are the rising price of homes in the US. As contractors continue to trend towards higher-end homes with luxury amenities, the average price of a new home continues to rise, which is now driving down interest rates. The Inquisitr previously reported on the outlook for the US home market in 2014.
“The effects of slower growth in China and the unstable situation in Ukraine are all contributing to the ongoing bid for Treasury debt, driving yields down and pulling mortgage rates down too,” said Keith Gumbinger, vice president of HSH.com, a mortgage information firm.
Up until this point, mortgage rates had seen a steady increase since the record lows witnessed in 2013, and rates had risen nearly a full percentage point since they began to rise following the initial recovery in the housing market across the country.
As mortgage rates have declined, the numbers of applications for home loans have increased, heralding a possible boom for the spring home buying market which has thus far seen a sluggish start this year. The Mortgage Banking Association reports a 5.3 percent increase in the amount of home loans applications. They also report that more people are applying for a mortgage to buy a home than to refinance one, due in part to the drop in mortgage rates.
“It’s official: We are in a majority purchase market for the first time since 2009,” The Washington Post reported Mike Fratantoni, MBA’s chief economist saying in a statement.
All this of course breaks down into good new for home buyers, who now have access to unexpectedly low mortgage rates in a home market that seems to be heating up.