Housing News

Mortgage Rates Drop to Lowest Level in a Month

As the spring housing market warms up, mortgage interest rates fell to their lowest level in a month.

Rates ticked down to an average of 6.3% for 30-year, fixed-rate loans in the week ending April 16, according to Freddie Mac. That’s also more than half a point lower than last year, when they averaged 6.83%.

“Compared to one year ago…this is a meaningful improvement for homebuyers during what is typically the busy spring homebuying season,” said Freddie Mac Chief Economist Sam Khater in a statement.

Mortgage rates had briefly dropped below 6% in late February. But they rose due to the war in Iran.

“The ceasefire announcement earlier this month may have temporarily eased mortgage rates,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. The multiple listing service covers the mid-Atlantic region. “[But] mortgage rates are probably going to remain volatile.”

Even small movements in rates can impact the size of a monthly mortgage payment. Someone buying a median priced home, at $415,450, with 20% down, would save $116 a month with mortgage rates at 6.3% instead of 6.83%. (The national median home list price is as of March using Realtor.com data.)

That adds up to nearly $1,400 a year and almost $42,000 over the life of a 30-year loan.

Homeowners who refinance an existing home loan from a higher to a lower rate may also see savings.

Refinance mortgage applications were up 15% in the week ending April 10 compared to the same week last year, according to the Mortgage Bankers Association (MBA).

However, mortgage applications from those purchasing homes dipped a little, ticking down 3% year-over-year, according to the MBA.

“New [home] listings increased in March, signaling sellers are gearing up for the spring,” said Sturtevant. “However, we’re not sure if the higher inventory will be enough to entice buyers into the market.”