Mortgage Loan Rates Drop Again Making it a Great Time to Buy, Sell, or Remodel

If you have clients who are hesitant to sell right now, tell them they don’t want to wait! Now is a great time to buy and sell! Mortgage rates are at an all-time low again, and getting a line of equity won’t ding your credit as harshly as regular mortgage loans.

30-year and 15-year Mortgage Rate Drops Below Three Percent Again 

Homebuyers had another chance to snag lower rates this week, and according to Freddie Mac, the 30-year fixed-rate mortgage averaged 2.98 percent the first week of July! If you are an investor, this is probably great news for you; 15-year fixed-rate mortgages averaged around 2.26%, meaning lower monthly mortgage payments during the same time period. 

Sam Khater, chief economist for Freddie Mac says, “Although low and stable mortgage rates have kept the housing market booming over the recent months, a deterioration in affordability and for sale inventory has led to a market slowdown.” With news like that, it sounds like the growing economy is alive and well in regards to how much money is being added to the overall GDP because of the buying and selling of homes. 

Are Mortgage Rates Impacting Home Sales?

The FHA shared that the total applications remained unchanged from 9.5 percent the week prior and the VA share of total applications decreased to 10.5 percent from 11.2 percent the week prior. So even though the rates on mortgage loans have gone down, we are seeing an overall stagnation of home selling and purchases. Why is this? Well, with low inventory and home prices still coming in at a higher price than years prior, it has dissuaded buyers from purchasing their dream home.

Purchase applications were 5 percent lower than the previous week, breaking a three-week streak of week-over-week increases. Compared to the same week last year, applications were down 17 percent. If your client has been on the fence about selling, now is a good time to do it because they are guaranteed to find a buyer for their home, and if they need a home to move into, purchasing a home themselves will come at a good rate if they are in the large group of individuals who need a loan to purchase their next home. 

Interestingly enough, buyers who are searching to purchase a place to call home are looking in an entirely different range of properties than they were previously. The average loan size for total purchase applications increased, indicating that first-time homebuyers, who might typically be interested in lower priced starter homes, are likely getting squeezed out of the market due to the lack of entry-level homes for sale. So luckily for them, these new lower mortgage rates will be in their favor. Whether or not mortgage rates are affecting home purchases, we can only say maybe. 

HELOC Loans Barely Ding Your Credit Score

A home equity line of credit is a revolving source of funds, much like a credit card, that you can access as you choose, and now that homeowners are sitting on a record-high $22.7 trillion in equity — the highest amount since the data was first recorded in 1945, the can take out a relatively large line of credit. Home equity loans and lines of credit are secured against the value of your home equity, so lenders may be willing to offer rates that are lower than they do for most other types of personal loans.

When homeowners take out one of these loans, they can still expect to see a decline in their credit score after taking out a line of credit, but decline tends to be relatively small and their credit score usually recovers in less than a year’s time. On average, scores took only about 96 days to recover from their lowest point to their pre-loan levels. This means that a HELOCs can be a good investment if you have a good use for a line of credit, and it won’t set you back in terms of hurting your score. With that equity, homeowners are taking out HELOC loans and getting a line of credit for various purchases like a home remodel, large purchases, or alternative debt repayment.