Mortgage rates continue to fall—what does this mean for you?

Money is cheap. Now might be the time to sell and to buy.

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Just last week, the average 30-year, fixed-rate mortgage slipped to 3.62 percent from 3.65 percent (compared to 3.8 percent a year ago). The average interest rate on a 15-year fixed-rate mortgage fell to 2.93 percent from 2.95 percent last week. And that was despite the fact that, in December, the Federal Reserve’s instituted their first slight interest rate hike since 2006.

But before you start popping open the bottles of Champagne, understand that falling rates have a lot to do with economic uncertainty. "Poor performing global stock markets and volatile oil prices have led to economic uncertainty," says Jason Van den Brand, a mortgage industry veteran and CEO of San Francisco-based mortgage refinance platform Lenda. "This uncertainty has resulted in the flight to safety that has kept mortgage rates low."

Let's look on the bright side, though: "The fact that interest rates are so low is a saving grace for the slowing market," says Rolan Shnayder of Citizens Bank. "Sellers want to sell and buyers want to buy." In many cases, buyers are willing to pay more for properties because they know they're getting very cheap money, he says, adding that he's seeing mortgage rates as low as 3.25 percent. 

And no one can tell whether that number will go even lower. "The interest rate environment can change fast without much notice. It’s quite possible rates could go down further if stock markets continue to perform poorly and investors keep moving to safety," says Van den Brand. If Friday's monthly jobs report is disappointing, rates could go even lower, experts say.

Like Shnayder, Van den Brand says customers are taking note of the low rates. "There are more borrowers coming to the site getting quotes who missed out on the first wave of low mortgage rates," he explains. "There are some borrowers who are now taking advantage of increased home equity and lower rates to cash out some equity to consolidate high interest credit card debt or tackle other large expenses...There is a lot of opportunity for homeowners to save a lot of money if they take advantage of the currently low mortgage rates."

For how long it will last? That part's unclear.


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