Next week, the Federal Reserve will likely cut interest rates. But mortgage rates are not waiting.
The average rate has dropped recently to 6.29% for a 30-year-fixed mortgage, according to Mortgage News Daily.
It’s the lowest in about 11 months.
For a half-million dollar home – which is the average in Connecticut – that means paying $2,473 a month for principal and interest with a 20% down payment.
That’s about a $200 a month savings from May when rates peaked at 7.08% and your payment would be around $2,682.
So where are rates headed now with the Fed meeting next week?
“Our rates are really based on inflation data. We look for inflation, consumer price index, jobs reports. So when those announcements are made our markets have already reacted. So our rates right now are lower because of the conversation about the Feds reducing the rate. So our market reacts before the Feds actually make any changes,” Denise Lanouette, of First World Mortgage in Enfield, said.
Lanouette said recent weaker job reports helped drive down mortgage rates.
There are expectations in the longer term rates will continue to slowly decline.
Now for those thinking about buying, she said it’s important to not time the market and points out as rates drop, there tends to be more buyers and home prices increase.
We spoke with a mom from Stafford Springs who said her family, including two kids, has outgrown their condo but affording a single-family home is tough in this market.
“My children aren’t getting any smaller. So it would be nice to be able to get something bigger with a backyard and, you know, space for them to grow,” Elizabeth Guite, of Stafford Springs, said. “Unfortunately, as everybody knows, housing prices are high and so are the interest rates and nothing’s really budging. So while we’re sitting on a lot of equity in our condo, the math just doesn’t work for us to sell.”
Guite is encouraged to see rates dropping, but would really like to see them in the 5s for buying to be more comfortable for her family.
Analysts agree that’s the level really needed to make a difference with such high home prices.
Lenders say with rates dropping, they are already seeing more people refinancing. A lot depends on the individual case.
But generally, they suggest if you’re just looking for a better rate wait, until it’s dropped about 1% from your current rate.