Overnight, mortgage rates saw the most significant weekly drop in a decade, which could make a big impact on the housing market.
The average rate on a 30-year, fixed-rate mortgage fell to 4.06%. That’s down from last week when it averaged 4.28%.
“There’re two things there,“ explains Jeff Checko with RE/MAX Advantage. “One, when’s the last time they dropped this much, which was 2008, and then as far as tracking at like 4-percent, they were at that level in 2017.“
Experts say the drop is due to concern for slowing economic growth.
“When you see the Feds signal that they’re concerned about slowing economic growth, whether or not that’s a reality — I think in Nashville that’s not, but nationally there may be some signs of that — the mortgage rates are going to respond in kind,“ Checko said. “So rates were raised on a short-term basis in the recent past because of concerns for inflation. And so, conversely, they would be kind of leveled off or even reduced if there were concerns for slowing economic growth.“
Experts say this low rate is wonderful news for both buyers and sellers.
“Sellers should see an immediate uptick in activity on their houses, like over this weekend,“ Checko said. “Buyers and people that represent them should also be ready to get on the horse and get out there and look at some stuff this weekend, rain or shine.“
It’s important to note that your credit score will impact the interest rate for which you qualify. The better your score, the closer you can get to that 4.06-percent rate.
“Anything credit score 720 or above is going to have the most attractive rates, and there may even be a slight incentive if you get [a score between] 750 and 800,“ Checko told News 2′s Cherish Lombard. “Typically, 720 is your benchmark. You’re going to see an impact on the interest rate at each level as you go down.“
You can’t lock in an interest rate until you have a contract on a house.
“You can’t say, ‘hey, I’m going to look at houses, let’s lock an interest rate,’“ Checko explained. “It has to be in conjunction with a target. So you’d better get going on finding something, too.“
It’s unknown when rates will go back up or if they’ll drop even more, but they fluctuate on a day-to-day basis. Since rates haven’t dropped this much since 2008, real estate experts say this could be an excellent time to start looking for your dream home!