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2019 Mortgage Interest Rates Decrease

2019 mortgage interest rates decrease to their lowest point in nine months. Both 15- and 30-year mortgage loan rates are down, which could increase activity in the U.S. housing market.

Mortgage Rate News

According to mortgage-finance company Freddie Mac, “The combination of improving affordability and more inventory than the last few spring selling seasons should lead to improved home sales demand.” The average rate for a 30-year fixed mortgage has fallen to 4.28% as of March 21, 2019. This is down from 4.41% on March 7 and significantly lower than the 4.94% seen in November 2018.

Mortgage applications have gone up slightly, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. “Lower mortgage rates and cooling home-price growth in early 2019 have been positive developments for home buyers who delayed their search because of cost constraints,” said Bob Broeksmit, MBA president and CEO.

The mortgage interest rates decrease over the last few months may help homebuyers who were on the fence decide to move ahead with securing a mortgage on a new home.

Federal Reserve officials updated their economic projections, trimming the number of increases they foresee in 2019 from two to zero. Meaning there should be no more rate hikes in 2019.

“The reason we’re on hold is that we think our policy is in a good place, and the economy’s in a good place, and we’re watching carefully,” said Fed Chairman Jerome Powell. “It’s a great time for us to be patient and watch and wait and see how things evolve.”

Danielle Hale, chief economist at Realtor.com, said “Mortgage rates changed very little over the last week and remain below where they were one year ago.”

Mortgage applications increased 5.3% over the last week, the refinance index rose 5% from the previous week and the purchase index grew 6%.

All these indicators, especially the recent mortgage interest rates decrease, mean that homebuyers who are looking to lock in a low mortgage rate can move forward with confidence as we move into the peak home-buying season of 2019.

McKee Homes

McKee Homes is doing our part to help homebuyers save money on a new home by offering buyer incentives that include up to $7,500 to use as you choose on the purchase of select homes. We also cover up to $5,000 in closing costs in select neighborhoods when using one of our preferred lenders.

“We’ve seen a continued momentum in our sales as buyers are taking advantage of lower rates and different lender financing programs. We have quick move-in homes available which has helped our buyers who feel an urgency. We have also experienced company record breaking sales in January and February. It’s great to go in to the Spring season with such enthusiasm and excitement for our homebuyers.” says McKee Homes Director of Sales and Marketing, Patty Sloan.

Now is a great time to take advantage of lower interest rates, incredible buyer incentives and low or no closing costs on a new home. To see a list of our preferred lenders and get pre-qualified for a home mortgage, visit our New Home Financing web page or give us a call at 910-672-7296.

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How The Prime Rate Affects Mortgage Interest Rates

Most people assume that when the prime rate goes up, mortgage interest rates quickly follow. While there is not a direct correlation between the two, the prime rate can indirectly influence many mortgage loan rates.

Prime Rate

The prime rate is based largely on the federal funds rate, tracking about 3% higher than the Federal Reserve rate, and is the commercial short-term interest rate. It is often referred to as the rate that non-bank entities and consumers with the best credit ratings can borrow money from banks.

The Wall Street Journal surveys 30 major banks and re-calibrates the rate every time three-quarters of those banks change their rates. Because of this frequency, the WSJ Prime Rate is one of the most widely accepted current prime rates.

Which Rates Are Affected by Changes In the Prime Rate

While credit card, auto loan, home equity and other short-term loan rates are directly affected by the prime rate, most long-term loans such as 30 year fixed-rate mortgage loans are only indirectly influenced by changes in the prime rate. The exception is adjustable rate mortgages (ARMs), which are directly affected by changes in the prime rate.

How The Prime Rate Affects Mortgage Interest Rates

Mortgage rates are generally determined by economic factors rather than the federal funds rate or the prime rate. The supply and demand for new homes and the supply of money by the Federal Reserve both influence the mortgage interest rate.

When the Federal Reserve increases the supply of money circulating in the economy, market interest rates are pushed lower to encourage economic activity. When the supply of money is decreased, the rates will rise.

A high demand for new homes, especially with low supply, will generally push mortgage rates up, while a lower demand for homes will push the rates down.

While seldom used as a mortgage index, the prime rate does indirectly influence mortgage rates. The prime rate is an important national benchmark which reflects the “mood” of the economy. As the prime rate moves up in response to a federal funds increase, short-term consumer loan rates, home equity loans and adjustable rate mortgages follow suit. Fixed mortgage rates will historically move up as well, although there is usually a delay, or “lag-time” between changes in the prime rate and changes in the 30-year fixed mortgage interest rate as they are not directly tied together.

Conclusion

While the Federal Reserve rate and prime rate directly affect short term loans, they also indirectly influence fixed mortgage rates eventually. If you are considering buying a new home and are following the prime rate increases wondering if mortgage interest rates will follow, you can expect that they will eventually move up, especially if there is a high demand for housing.

With new home prices going up in 2018, a high demand for housing, and the prime rate increasing to over 5% last year, it’s better to act now instead of waiting, to avoid paying a lot more for a new home later.