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Mortgage Rates See Record Decrease, Drives Applications for Home Loans

Borrowing Advice

Family walking into their new house, with a sold sign in the front yard.

April showers bring …. lower mortgage rates? We’re certainly leaping into spring with a surprise, as mortgage rates continue a downward trend. In November of 2018, the market started to see a change in rates, as they crept downward, but experts were unsure if the move would continue. Five months later and the interest rates for 30-year and 15-year mortgages have plummeted more than they have in over a decade.

The 30-year fixed-rate dropped from an average of 4.28% APR* to 4.06% APR while the 15-year fixed-rate average dropped from 3.71% APR* to 3.57% APR.

Many consumers are interested in the sudden decrease, but most are weary to make any hasty financial moves without knowing why the drop happened. The decline is a result of several factors, the most notable being a decision made by the Federal Reserve. It recently halted interest rate hikes for the remainder of 2019 due to uncertainty around economic growth.

This inspired investors to assume less risk, driving mortgage rates down, according to the Washington Post. The stock market is inching towards an all-time high. Inflation is plateauing and the unemployment rate is at a record low. This combination of circumstances has helped set the stage for a strong downward trend in interest rates.

So, what does all this mean?

It’s a Smart Time to Apply

Despite the economic volatility at home and abroad, US Community Credit Union (USCCU) Mortgage Department Manager Lauren Bolus said now is certainly a good time to apply for a home loan.

“Currently, future homebuyers are likely to get a lower interest rate than what we’ve seen in the last year or so,” Bolus said. “The rates may not fall as low as we saw after the last recession, but these lower interest rates will help buyers qualify for a loan at a lower monthly payment.”

And for Middle Tennessee residents trying to fit a mortgage into their budget, those lower interest rates could be the determining factor. Residents who have been eager to buy, but unable to find a price point that won’t overextend their family situation should certainly be able to take advantage of this market change. Not only are homebuyers in an advantageous position with the decreasing rates, but so are those looking to refinance their current home loans.

“Anyone who wanted to refinance, who had maybe considered it last year but the rates were too high, could potentially re-apply now,” Bolus said. “The lower interest rate could actually make sense for their refinance to be completed.”

Should You Pursue a Home Loan?

March is the beginning of home buying season, and you may be interested in taking advantage of decreasing interest rates. Whether you want to apply for a home loan or refinance a current one, consider the following factors that could directly influence your pre-approval status and loan amount.

Applying for a Home Loan

Bolus and her mortgage team saw a 50% increase in the number of mortgage applications for review fly through their queue in March alone, and contributes that to members having more confidence in their ability to get approved as a result of the decreased interest rates. She encourages applicants to review their finances and develop a projected timeline for when they want to purchase a home.

  • Apply for pre-approval 30 to 60 days days before you hope to complete your home purchase.

  • Avoid opening new credit lines.

  • Pay any current credit lines on time.

  • Plan ahead and save as much as you feel comfortable investing in a down payment.

Refinancing a Home Loan

Maybe you already have a home loan with a higher interest rate and believe the rapidly decreasing mortgage rates might help you lower your monthly mortgage payment. Bolus believes refinancing is a suitable option, but cautions homeowners to check with their current lender. It’s important to confirm that the rate you have is higher than the rate you could receive with the lowered interest rates.

  • Monitor your credit and refrain from opening new lines of credit.

  • Stay current on already established lines of credit.

  • If you want to refinance for home improvement purposes, obtain a few quotes before applying for a new mortgage.

With the return of home buying season, a period of time that typically lasts between March and October, Bolus is seeing more USCCU members submit applications for home loans, home equity lines of credit, pre-approval, and refinancing.

“We’re definitely seeing these applications increase, and of course, the market is coming down as well,” Bolus said. “Our membership has noticed that and they’re asking about it.”

If you have questions about how you can save money on a new mortgage or refinance a current one, contact the USCCU mortgage team by phone at (615) 256-8712 ext. 3254 or email mortgages@usccu.org.

*APR=Annual Percentage Rate. Speak to a USCCU Mortgage Representative for information specific to your loan scenario. Rates based on individual credit score. All rates subject to change.