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Mortgage Rates Fall to New Annual Low This Week

When the Federal Reserve raised its mortgage rates late in 2015, many providers of mortgages and real estate professionals truly believed that home loan interest rates would climb significantly. This past Monday, however, CNBC reported that the average rate on a 30-year fixed mortgage is lower than it has been in all of 2016 and that it could drop even more – potentially even setting a new record.

Low Rates Aren’t Spurring Buyers

Despite the fact that mortgage rates are the lowest they’ve been since the start of the year, buyers are not taking the bait. Many consumers feel pessimistic about the economy, which means that applications for mortgages are still on the decline. What’s more, according to representatives from Fannie Mae, which just had its worst month for home purchases in the last 18, buyers and sellers alike believe that spring is the wrong time to make real estate decisions, even despite falling mortgage rates.

It’s All About the Economy

There are three main contributors to the pessimism regarding the economy late in the first quarter of the fiscal year. First and foremost, both the mortgage ratesEuropean Central Bank and the Federal Reserve voiced concerns about the path the global economy is taking. Oil prices seem stalled, the Presidential race is incredibly heated, and analysts are concerned about stock corrections in upcoming weeks. All of these things have potential home buyers and sellers on the edge of their seats, and many are unwilling to take on a new loan or sell their property until the market stabilizes.

Will Mortgage Applications Continue to Drop?

In today’s economy, consumers need much more than just a low mortgage rate to spur home buying. According to Matthew Graham, who is the chief operating officer of Mortgage News Daily, April 2016 brought with it poor attitudes about income growth, job confidence and security, and the home selling climate as a whole. As such, mortgage applications may continue to drop, even as the rates themselves continue to fall. This may spur rates to plunge even lower.

What to Expect for the Rest of 2016

While it is difficult to make predictions regarding mortgage rates and the state of the real estate industry throughout the rest of 2016, there are a few things that are certain. Experts and analysts believe that mortgage rates will continue to fall – even into record-setting territory – in an effort to persuade new buyers to make the leap. However, much of this depends on the economy and the general public’s perception of it. Things like the prices of oil, the job market, and even the next president all have a tremendous impact on the real estate market, and in cases like this, even record-setting rates may not help potential buyers overcome their fears.

Consumers interested in obtaining mortgages this month may find that the credit requirements have tightened a bit, particularly for conventional loans. On the other hand, FHA and VA lenders have lessened their requirements somewhat. Either way it goes, consumers can expect mortgage rates to continue to dip – at least until the economy is a bit more stable.

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