Project iraq - erbil

Rates drop ahead of big house-hunting weekend

The plummeting U.S. stock market is giving potential homebuyers an unexpected boost, in the form of lower mortgage rates. The average rate on the popular 30-year fixed mortgage moved down decidedly Friday to 3.75 percent, according to Mortgage News Daily. It was above 4 percent just a week ago.

"Just when it looked like 2016's already impressive drop in rates might be running out of steam, we're starting the day with the biggest improvement of the year, thanks to the ongoing rout in equities and oil," said Matthew Graham, editor of Mortgage News Daily. "This is made all the more impressive by the fact that lenders are typically more conservative on the Fridays before a three-day weekends."

The rate moved an eighth of a percentage point lower overnight. That may not sound like much, but it is considered a huge move in such a short period.
 "We only see that happen a few times in any given year," Graham said.

The housing market is still in its usual winter doldrums, but a long holiday weekend will mean more open houses. Martin Luther King Day is Monday. With the number of listings nationwide still very low, competition is high, and buyers need every extra dollar they can find. The rate move lower not only helps in monthly payments, it also helps borrowers qualify for more house. Rates had been expected to rise through 2016, so this drop is unexpected.

"If you are in the market now looking, it does add a sense of urgency," said Nela Richardson, chief economist at Redfin, a real estate brokerage. "There's a difference between being pulled in — if you're on the fence, it may or may not help, but for those active buyers, it absolutely affects them."

On the other hand, market volatility is never a good thing for any consumer, whether they're in the market or not. For most Americans, a home is their largest investment, and that makes it their most emotional investment.

"The reason rates are so low is because the stock markets are volatile, so for some buyers the stock market volatility is going to outweigh the low mortgage rates," Richardson said.

If buyers are planning on using stock or options that are tied to the stock market in their home purchase, they will also take pause. Overseas buyers may also be dissuaded, although they buy in cash overwhelmingly.