This Mortgage Rate Chart Shows Why Home Buyers Should Hustle

Highlights from this report:

  • The mortgage rate chart below shows a steep decline over the past six months.
  • This chart is based on the weekly interest rate survey conducted by Freddie Mac.
  • Those who are in the market for a mortgage loan have a good reason to hustle.

The Steady Decline Continues

Another week, another drop in mortgage rates. That’s the latest news being reported by Freddie Mac, the government-sponsored buyer of mortgage loans.

According to the company’s latest survey of the lending industry, the average rate for a 30-year fixed mortgage loan dropped to 4.06% this week. That marks four consecutive weeks of declines. More importantly, mortgage rates today are significantly lower than they were six months ago.

Given these latest trends, it’s no surprise to see home buyers and homeowners rushing to take out loans. According to the application survey conducted by the Mortgage Bankers Association (MBA), home loan applications rose 2.4% during the week of May 22, compared to a week earlier.

Based on this survey, it seems that more home buyers are rushing to lock in with today’s low rates. And they’re probably right to do so. After all, this downward trend could reverse itself at any time.

Recent forecasts from both Freddie Mac and the Mortgage Bankers Association predict that rates will be slightly higher at the end of 2019 than where they are right now.

Financial markets are still jittery, as well, due to ongoing trade tensions between the U.S. and China. These and other factors have increased volatility within the financial sector. So it’s anyone’s guess what mortgage rates might do in the month’s ahead.

This Mortgage Rate Chart Says It All

If a picture is worth a thousands words, the chart below speaks volumes.

This mortgage rate chart shows the steady decline that has occurred over the past few months. It’s based on data provided by Freddie Mac, collected through their weekly industry surveys. May 2019 is shown on the far right.

Chart: 30-year mortgage rate average, Nov. 2018 – May 2019. Source: Freddie Mac.

To create this mortgage rate chart, we established a date range extending from November 2018 to the current week ending on May 24, 2019.

We chose November as the start point because that was when mortgage rates last reached a peak. At that time, the average rate for a 30-year fixed home loan was 4.94%. But, as you can see from the mortgage chart below, rates began to fall during the latter part of 2018. They continued to decline at the start of 2019, despite a brief climb in April.

Here’s what home buyers should take away from this mortgage rate chart:

  • On average, home loan rates today are the lowest they have been for a long time. In fact, we haven’t seen figures this low since the beginning of 2018.
  • At the start of this year, the average rate for a 30-year fixed mortgage was around 4.5%.
  • That average dropped steadily over the past few months, hitting a low of 4.06% during the week of May 23, 2019.
  • But we don’t know what will happen in the coming months. Two industry groups have predicted a rise in rates later this year.

Summer 2019: A Good Time to Buy or Refinance a Home?

With mortgage rates sinking to their lowest level in more than a year, summer 2019 is shaping up to be a good time to buy or refinance a home.

Buyers who choose to use a long-term fixed-rate mortgage loan (like the most popular 30-year option) could capitalize on today’s low rates while protecting themselves from future increases down the road.

Related: A hot housing market this summer?

Many homeowners, on the other hand, are now in a good position to refinance their existing mortgage loans into one with a lower interest rate. This can lead to significant savings over time, especially in those cases where the homeowner plans to stay in the home for a lengthy period.

The latest MBA application survey revealed a significant increase in refinancing activity nationwide. According to Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting:

“The refinance index increased 8 percent to its highest level in over a month, and once again there was an increase in average refinance loan sizes, as borrowers with larger balances responded accordingly to lower rates.”

Affordability Concerns as Prices Keep Rising

Meanwhile, home prices are still rising steadily in most U.S. cities. According to the research team at Zillow, the median home value in the U.S. rose by 6.1% over the past year. They expect prices to continue rising over the next year, but at a slower pace.

This trend works to the advantage of homeowners who are thinking about refinancing. It gives them more equity in their homes (and equity is one of the common requirements for a refinance loan).

Future buyers should also keep a close eye on home prices. While mortgage rates are currently at their lowest level in months, house values are still climbing in most U.S. cities. Given those two factors, one could argue that it would be better to buy sooner rather than later.

Many real estate markets across the country are grappling with affordability issues in 2019. In such places, a person with a median income for the area can’t afford to purchase a median-priced house. Rising home values will make these conditions more common in 2019, especially in those markets where prices have already risen sharply.

So, for many home buyers a sense of urgency is warranted. The mortgage rate chart above shows why now might be the right time to take the plunge.