Mortgage Rates Are Lower Than They Were a Year Ago

Can I rant about mortgage rates for a minute? I just can’t help myself. First things first, current mortgage rates are actually lower today than they were a year ago. Let’s make that clear.

This is true despite the headlines warning you to “BUY NOW” and to do so before it’s too late, before interest rates rocket to the moon.

If you don’t act now, you might be stuck with a mortgage rate in the double-digits…well, that’s what all that fear mongering makes it feel like.

The 30-Year Fixed Averaged 4.15% This Week

• It’s early 2018 and mortgage rates are still lower than they were last year
• While the 30-year fixed has climbed to 4.15% per Freddie Mac
• It’s still below the 4.19% being offered this time last year
• Which means there’s no need to panic just yet

Let’s start with the facts. The 30-year fixed averaged 4.15% this week, per Freddie Mac, which collects mortgage rate data from lenders from Monday through Wednesday.

This gives them a good idea as to what’s being offered, despite the survey being inherently flawed if you take it at face value, which you shouldn’t.

While 4.15% is indeed up a sizable 11 basis points from 4.04% last week, it’s still down from 4.19% a year ago. So to get in a tizzy over the recent increase in mortgage rates would be silly, at best.

Additionally, 30-year mortgage rates anywhere close to 4% is a reason to celebrate without question, both historically and recently.

Here Comes the Panic

• Whenever rates rise for a sustained period
• Everyone assumes they’ll never come down again
• Or that they’ll never stop increasing week in and week out
• But sometimes that’s precisely when they reverse course

When mortgage rates rise for a few successive weeks, or climb rapidly, which they kind of maybe did in the past few weeks, a lot of irresponsible reporting and exaggerating nonsense surfaces.

To put it in perspective, a rate of 4.25% versus 4% on a $300,000 loan amount equates to a difference of $44 per month. Yes, it’s real money, but it’s not a reason to panic and make crazy decisions, or pull your hair out.

It’s not like you were thinking about buying a home this year, saw that rates went up a quarter of a percent, and then rushed out the door to place an offer immediately (I hope).

If you did do that, take a second to check yourself. Buying a home shouldn’t be an impulsive decision driven by numbers alone, unless you’re a bona fide real estate investor.

Sure, it might make you stop procrastinating, but it shouldn’t drive your decision to buy vs. rent a home entirely.

Mortgage Rates Might Drop Again

• Think of the stock market for a second
• When it dumps for a few days
• Everyone panics and sells or simply doesn’t buy
• But often you see a reversal and then traders kick themselves

Ultimately, mortgage rates are experiencing a bad month, but that doesn’t mean they will continue to rise indefinitely.

They go up and down all the time, and sometimes sideways, just like the stock market and other securities. It just so happens that they’re on an upward trajectory at the moment.

Last year, the 30-year fixed averaged close to 4% throughout the entire year. At times, it went as high as 4.30%. At its best, it may have dipped to around 3.75%.

Interestingly, rates were highest during the first quarter of 2017 and increased to that yearly-high of 4.30% in March.

Today, we’re getting closer to 4.25%, which is basically the same range we saw in 2017, month after month.

Yes, I’d rather have a rate of 4% too, but it’s not the end of the world. And we could well see rates drift back to 4% or lower this year. I wouldn’t be the least bit surprised. So relax!

Read more: 2018 Mortgage Rate Forecast