The lower rates aren’t just confined to conservative 30-year fixed-rate loans. Rates averaged 3.23% on 15-year fixed-rate loans and 3.1% on five-year adjustable-rate mortgages as of Thursday, according to Freddie Mac.
“It’s good news for people who are already in the market,” says Hale. “Lower mortgage rates translate into a lower monthly payment.”
Anxious would-be home buyers have been watching mortgage interest rates finally begin ticking up again in 2017, after years of historical lows. And when the Federal Reserve raised the short-term interest rate in March, the conventional wisdom was that mortgage rates would follow suit—as they typically do.
But that’s not happening this time around. Despite a Fed hike just last month and two more looming on the horizon, the average interest rate for a 30-year fixed-rate mortgage fell back below 4% for the first time since November, according to Freddie Mac.
They were at just 3.97% as of Thursday, down from 4.08% the previous week and a high of 4.3% for the year, on March 16.
So what’s going on?
“If you had an answer to that question, you’d probably make millions trading on Wall Street,” says Danielle Hale, managing director of housing research at the National Association of Realtors®. “Interest rates are really tricky to predict.”
Yet even a small change in the interest rate can be a game changer for buyers. A fraction of a percentage point can add up to hundreds of extra dollars a year in mortgage payments. And that extra money can make a real difference in the kinds, sizes, and locations of homes that buyers can afford.