Rates on 30-year mortgages dropped sharply again this week, falling to the lowest level in seven months.
On Thursday, Freddie Mac’s nationwide survey found that 30-year, fixed-rate mortgages had declined to 5.78 percent from 5.93 percent the previous week.
It was the fifth consecutive weekly decline and dropped the 30-year mortgage rate to the lowest level since the week of Feb. 14, when it stood at 5.72 percent.
Freddie Mac says the big drop in mortgage rates is fueling a boom in refinancing, with mortgage applications up 58 percent since mid-August.
Rates have continued to fall following the U.S. government’s takeover of troubled mortgage giants Fannie Mae and Freddie Mac on Sept. 7. The government has pledged as much as $100 billion per company to shore up their capital, a move that assured a continuing flow of funds into the nation’s housing market.
So what does that mean for buyers and sellers of real estate? Well, for buyers, lower rates means that as more and more potential homeowners are able to afford a home purchase again, the availability of well-priced homes will shrink at a faster pace, putting pressure on a possible price hike. Clearly the temporary buyers’ market won’t be around for ever.
And for sellers? Great news! The decline in mortgage rates widens the market, eases tension, increases confidence, and gives a substantial boost to the spending power of savvy buyers looking to buy a home while prices are still affordable.
