The cost of buying a house is still out of reach for many want-to-be buyers, but one thing’s for sure: mortgages themselves are very cheap. Even though the Federal Reserve is now in a tightening cycle, mortgage rates are still historically a good deal.
Funky Mortgage Rate Patterns
As of 6/29/2017 (per Freddie Mac), the average 30-Year mortgage rate stood at 3.88% for a 30-Year conventional mortgage. The 3.31% we touched in November of 2012 it is not – but that’s still historically an awesome deal. By our math, taking that series back to April of 1971 that’s in the lowest 5.64% of all weekly average mortgage rates.
The funkiness, however, is that mortgage rates haven’t (yet?) followed the Fed up. Here’s what the 30-Year looks like overlaid with the Effective Federal Funds Rate:
Interestingly, you can see the mortgage rate is actually in a bit of a downtrend. After an initial period of rising rates post-election, rates peaked in March and have since come down almost half a percentage point. Here’s a closer look at the numbers post-election:
|Date||Average 30-Year Mortgage Rate|
Winning the Mortgage Rate War
Mortgage rates are generally (read: when not purchased en masse by a Central Bank) driven by the market’s whims, so keep an eye on Treasury rates rates to see how longer term debt is doing in general. A quick glance at 5-Year and 10-Year rates illustrates recent rate changes well:
So, if you’re in the market to refinance – or if you’re flush with cash looking to buy after swearing off your avocado habit – know mortgages are cheap. Prices, yes, are not so great – but we’ll look into affordability in a future article.