After Tuesday’s Federal Reserve interest rate cut, mortgage rates dropped more than I thought possible just two weeks ago. I had a buyer lock in a 30 year fixed rate at 4.75%! That is simply unbelievable…
With rates having dropped from 6.25% a few months ago to 4.75% – 5% today, buyers with a loan amount of $200,000 would save up to $188 per month! Their other option would be to”step up” their home search since this rate reduction has increased their purchasing power by a substantial $36,000 and keep the same loan payment!
When I purchased my new home in August and locked in at 5.875% I thought I got a great deal. Now with rates 1% lower, I see everything in this market as 10%+ cheaper than it was just a couple months ago. Add to this great rate the fact that housing prices typically bottom in the December – February timeframe and I see a lot of opportunity out there.
Not everyone should be buying a house in this market but there are many buyers that should who have been waiting on the sidelines. Yes I know the economy is tough right now and I know that many people worry about their jobs but people always need a place to live and with housing costs at these levels I think it is clear that owning is better than renting, so long as you are looking to stay in your home for the next 4-5 years.
