Hot on the heels of falling 10-year bond yields, the conflicting news just keep on coming. The newest reports show that mortgage rates have continued to plummet and that both 30-year and 15-year fixed-rate loans have hit rock bottom, literally breaking records. Worries about global economic recovery have facilitated a 0.04% drop for the 30-year mortgage while the 15-year dropped 0.03%, bringing each to 3.49% and 2.80% respectively.
This is of course good news for homeowners who want to refinance their loans and save thousands of dollars a year in borrowing costs. There are more than a few people looking to capitalize on this situation. Refinance applications are soaring right now, even though applications for purchase loans—because of their scarcity—are more likely to be approved. If you’re got schemes on a new home go ahead and call the movers, because you’re basically a shoe-in for the loan you need.
This, of course, comes on the heels of news that home prices are showing signs of bottoming out and rebounding. Home values have gone up 0.2% percent, marking the first increase since 2007. Additional growth was shown in the fact that April marked the first monthly increase in over half a year. Despite anemic job growth, the housing market jolt suggests the possibility that we’ve seen the bottom of the real estate crash.
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How the falling mortgage rates will figure into this remains to be seen. Economists hope it will fuel an even bigger uptick in new purchases, though data from June showed that new home sales were down 8.4% from May. A boom in new sales would have a good effect on the overall economy, triggering home construction jobs that would reduce the unemployment rate.
This flurry of data testifies to few certainties, although we can certainly still say that the weakened economy continues to feed pessimism among investors. Hopefully an uptick in home sales, which could be precipitated by the fall in mortgage rates, will inspire more confidence. Though it’s more likely it will merely encourage more refinanced home loans.