Mortgage rates drop due to Wall Street’s tariff fears
A threat of Mexican tariffs could help home buyers and homeowners looking to refinance. Worried investors moved more money into bonds, which nudged the average 30-year fixed-rate mortgage down to 3.82% – a decline from last week’s 3.92%, the first to break below the 4.0% barrier. These rates are from the June 6th, 2019 Freddie Mac PMMS weekly survey and are based on prime customer credit etc and 0.5% upfront point. Rates will vary based upon your credit and particular situation.
A year ago, the average fixed-rate mortgage rate was 4.54%.
The average rate for 15-year, fixed-rate home loans also declined, dropping to 3.28% from last week’s 3.46%.
The recent sharp drop in mortgage rates hasn’t unlocked savings just for those looking to purchase a home – homeowners may also benefit. About 5.9 million borrowers could see their rates drop by at least 75 basis points by refinancing their mortgages, according to Black Knight, a mortgage software and analytics firm – 2 million more in the past month alone.
That’s the largest population of eligible borrower candidates in nearly three years for savings. The savings could add up to about $271 per month per borrower. If rates drop another quarter point, Black Knight estimates that 7 million borrowers could then potentially benefit from refinancing their home mortgage.
“When we factor income into the equation, we see that it takes 22% of the median income to purchase the average-priced home,” says Ben Graboske, president of Black Knight’s data and analytics division. “That’s the lowest payment-to-income ratio in more than a year as well, and far below the long-term average of 25.1%.”
Source: “As Mortgage Rates Plunge, Millions More Homeowners Can Benefit From Refinancing,” CNBC (June 3, 2019) and Black Knight.