According to Mortgage News Daily, the average rate on the 30-year fixed-rate mortgage has fallen from 7.22% to 6.62%. This is excellent news for homebuyers looking to purchase a new home. The dip, which is the largest single-day decrease since 2009, is a result of ease in inflation.
When inflation is high, interest rates tend to rise as well. The opposite is also true: when inflation is low, interest rates usually fall. This relationship exists because inflation erodes the value of money, so lenders require a higher return (in the form of higher interest rates) to offset this loss. The good news for homebuyers is that inflation has been easing in recent months. According to the latest Bureau of Labor Statistics figures, the inflation rate fell from 2.9% in September to 2.5% in October. This decrease has helped to push mortgage rates lower as well.
For example, on a $300,000 loan, a homebuyer with a 6.62% interest rate would pay about $1,398 monthly in interest. However, if the interest rate were 7.22%, the monthly interest payment would be about $1,478 – a difference of $80 each month. Throughout a 30-year loan, the homebuyer with the lower interest rate would save more than $29,000 in interest payments.
Homeownership allows you to build equity over time. As you make mortgage payments, your equity stake in the home grows. This means that your home could be a valuable asset for your financial future. In addition, homeownership can provide tax breaks. The interest you pay on your mortgage is usually tax-deductible, saving you money at tax time.
If you’re considering buying a home, now is a great time to do it. With lower interest rates, you can save on your monthly mortgage payments and get the stability and security that comes with owning a home. Stanley Martin wants to help get you into the best home that suits your needs. View all of our available homes today. Want to move in before the end of the year? Look for the homes with the Big Red Bow!