Mortgage Rates Fall, Signaling Good Time to Buy

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Mortgage rates have tumbled below 4% in the last few weeks, signaling that now is a great time to pull the trigger on buying a new home in Palm Beach County if you’ve been house hunting or just generally on the fence about buying.

In April 2019 alone, the mortgage rates started the month out at 4.50%; 30 days later, it was 4.06%. A half-point dip can have a substantial impact on your cost of borrowing – as much as a few hundred dollars a month, and tens of thousands of dollars over the life of the loan in interest payments.

Today’s rate at the time of this writing is 3.99%, according to the Primary Mortgage Market Survey published by Freddie Mac.

Freddie Mac Mortgage Rate Graph

Mortgage Rates for Palm Beach County

All mortgage interest rates are benchmarked to the 10-Year Treasury Note bond market, so national and international macro-economic events can affect what the rates does in any given period. Events such as turmoil in the stock market that causes investors to flee to the bond market, fluctuations in the commodity markets, and even national political sentiment can all influence the bond markets, and therefore, the mortgage rate you pay in Palm Beach County.

Recently, the U.S. (and in particular, President Trump) have engaged in a war of words with China over unfair trade practices. President Trump slapped punitive trade tariffs on billions of dollars’ worth of imported Chinese goods, causing investors in our country’s major stock indices to panic and flight their capital to the safety of the bond markets. As bonds trade, the yield on those bonds shrinks, causing mortgage interest rates to fall.

That is the best explanation for why mortgage interest rates are falling — geo-political uncertainty in the age of the Trump Administration.

What Lower Interests Rates Mean for You

If you’re borrowing now and plan to hold the loan for 30 years: A lower 30-year mortgage interest rate simply and plainly means less money in interest you’ll pay over the life of the loan. So if you do plan on holding your loan to maturity, you want to lock in the lowest rate possible. Even a quarter of a percentage point higher or lower can be the difference between tens of thousands of dollars in borrowing costs over thirty years.
If you’re borrowing now, but don’t plan to hold the loan for more than a few years: Now may be the best time to borrow for a mortgage. The traditional 30-year fixed loan is becoming passé. Today, you can borrow a mortgage for 15, 20, 25, or 30 year terms, and each term comes with a myriad of other options, such as whether it is a fixed rate or a floating rate.
If you’re a homeowner, but you bought when rates were high: This is a great time to refinance for many borrowers who purchased in 2018 when mortgage rates averaged around 4.50%. Refinancing could not only lower your mortgage payment on a monthly basis now, but it would save you tens of thousands of dollars in the coming years.

Of course, re-financing your loan comes with origination fees and costs, so you’ll want to explore the many different options and products provided by lenders. Ally Bank has an excellent Refinancing Calculator that lets you discover whether refinancing makes sense today. Ally also offers lower-than-average origination fees on their refinance products.

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