Though a small decrease for mortgage rates, the 30-year fixed rate fell by seven points, and the 15-year fixed rate dropped by 10-points last week. “Six months ago, the 30-year rate was 42 basis points higher than now. The 15-year rate was 48 basis points higher and approaching 7%. So even though rates are elevated by historical standards, they are still lower now than if you had bought a home in mid-November,” according to Yahoo! Finance news.
Hoping for a larger drop, we have to wait for the Federal Reserve to lower the federal funds rate. Unfortunately, there is a 91% chance the Federal Reserve will not lower its rate in the near future. Ideally for anyone house hunting it is best to wait until later this year in hopes for lower mortgage rates. It cannot hurt to start looking now though.
Individuals with higher down payments, great credit scores, and low debt-to-income ratios are typically better candidates for lower mortgage rates according to mortgage lenders. “You can also buy down your interest rate permanently by paying for discount points at closing.
A temporary interest rate buydown is also an option.” The interest rate buydown costs more upfront while allowing greater savings down the line across the life of the loan. Discount points can be a strategic financial tool since they are an optional fee an individual can pay to lower the interest rate on a home loan.
From 2021 to 2023, it was reported by the Consumer Financial Protection Bureau (CFPB) that the number of homebuyers paying for discount points dramatically increased. This was prominent among individuals with lower credit scores.
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