Is 2019 the best time to consider buying a home? Recent mortgage loan interest rate trends and the news agencies that report on them seem to indicate that conditions are very good for first-time
One indication? Headlines during the week of August 4, 2019 that included phrases like, “Lowest Rates Since November 2016”. And then there are reports by agencies that monitor house prices in the United States.
Consider the First American Real House Price Index (RHPI), which tracks the prices of single-family homes and the effects of factors like changes in mortgage loan interest rates on consumer borrowing power.
The May 2019 report by First American includes this quote:
“Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 1.3 percent between April 2019 and May 2019, and increased 9.3 percent year over year.”
The week of August 4th saw FHA home loan interest rates (best execution) hit levels as low as 3.25%. That is a significant low for those well-qualified borrowers who are offered that rate by a participating lender.
And even for those who do not qualify for that low rate, the numbers are still better than they have been in years past depending on the day, market conditions, and other variables.
What do you need to know about interest rate and home buying trends? The most important thing is that these trends can be cyclical, they are subject to major change, and borrowers should not rush into a mortgage loan application no matter how low rates go.
The mortgage loan interest rate you are offered today depends on your FICO score and other qualifying factors in addition to the market trends currently informing the rates.
If you are not ready to commit to a house and enter into a mortgage rate lock commitment with a lender who has processed your credit application, the rates offered today don’t really do a first-time home buyer or experienced borrower any good.
When you are ready to apply for the loan, get serious about a specific property, and have a lender willing to work with you, that’s when the mortgage rates offered at the time will matter most to you.
If you aren’t quite ready to commit to a loan, it’s fine to keep an eye on mortgage loan interest rate trends, and it helps to know the going advice about “floating” or “locking” when it’s time to commit to a mortgage loan rate lock with your lender.
If you think rates may go lower when the time is right, you can delay the mortgage rate lock in hopes rates go lower, or you can lock in the current rate with an agreement with your lender.
But until the time is right, interest rates are nothing more than data. Granted, it’s data you need to make informed decisions about your mortgage including the length of the loan term and how much your loan will cost over the long run, but until you actually commit with the lender, the numbers are useful, but hypothetical unitl you commit.