Freddie Mac had good news to report regarding 30-year mortgage rates last week. It was the third consecutive week the average 30-year fixed mortgage rate dropped. This report was the lowest point in the history of the survey, which was established in 1971.
Great news for homebuyers in the market. Today’s rates will allow homebuyers to purchase a home with a sticker price they would not even consider looking at a year ago. Sam Khater, Chief Economist at Freddie Mac says this surge in low rates has kept the homebuyer demand going throughout the summer. Realtor.com reported a flood in the market with monthly traffic hitting an all-time high of 86 million unique users in June. Daily traffic was also off the chart at 7 million unique users as of June 25. The global pandemic is not stopping the housing market. Buyers are still ready to make a purchase.
Why not, when the rates are so low. The average monthly mortgage payment has decreased significantly. Looking back per decade since the inception of Freddie Mac’s survey, today’s rates allows a very low monthly payment. As seen in the chart displayed the mortgage payment for a $300,000 loan by decade sharply declined. In the 70’s the average rate was 8.86% with a 2,384 monthly payment, the 80’s saw even higher rates at 12.7% with a $3,248 monthly payment, in the 90’s the rate dropped to 8.12% with a $2,267 monthly payment, the year 2000 had a significant drop to 6.29% with a monthly payment of $1,855, ten years later in 2010 the average rate was reported at 4.09% making the monthly payment $1,448 and finally today we see the record low of 3.03% with a low monthly payment of $1,270.
These low monthly payments can add up over the life of a home loan. As mentioned earlier, homeowners can now qualify for a bigger home purchase than before. This year has seen its share of disaster but the home market has been positive among the pandemic. If you are in a position to purchase a home, reach out to a Realtor who can help you through the process of purchasing a new home.
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