US mortgage rates continue to drop, with the latest report from the Mortgage Bankers Association revealing an average rate of 3.87% for the week ending January 10 – their lowest point since September 2019. As a result, refinance and purchase loan activity soared, with the latter jumping by 16% on the week to reach its highest point in over a decade.
"Homebuyers were active the first week of the year. Purchase activity was 8 percent higher than a year ago, and the purchase index increased to its highest level since October 2009," said Joel Kan, Associate Vice President of Economic and Industry Forecasting.
Refinance applications jumped 43% for the week, a 109% year-on-year increase. All in all, refinancing accounted for 63% of all mortgage activity during the seven day period. These conditions are good news for aspiring homebuyers, and as such we recommend checking out what the best mortgage lenders have to offer this January, to see if there's a deal that meets your needs – and we also have advice on the best refinance mortgage lenders and the best reverse mortgages .
However, the surge in market activity means that while mortgage rates are currently very competitive, securing the home of your dreams could still prove tricky due to increased homebuyer interest. While buying a home is a big deal and a decision that should never be taken lightly, acting quickly if the right situation presents itself could be a good idea given the circumstances.
Record low possible as investors take flight
Fortunately, it looks like the current window of opportunity isn't going to shut any time soon for homebuyers and refinancers. An uncertain global landscape – think US-Iranian tensions, Trump's impeachment trial, and Brexit – means that investors are opting for the security of government-backed assets.
According to Mark Fleming, chief economist at title insurance firm First American (via Forbes), a continuation of this 'flight to safety' pattern could see 30-year mortgage rates drop to as a low as 3.2%, which would be a first in the US housing market. The previous low as reported by Freddie Mac is 3.35% in 2012, and we know that we're currently at a 13-week low according to data from the same firm.
“Against a backdrop of uncertainty, investors worldwide look for a safe place to put their money. US bonds, backed by the full faith and credit of the U.S. government, are widely considered the safest investments in the world. When global investors sense increased uncertainty, there is a ‘flight to safety’ in U.S. Treasury bonds, which causes their price to go up, and their yield to go down. US home buyers benefit from this dynamic," Fleming commented.
This means that buyer patience could be equally well rewarded, so if you're unable to nail down the deal of your dreams right away, another opportunity could be just around the corner. You can compare the latest rates at LendingTree below.
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