Despite most analysts' predictions, mortgage rates dropped near record lows in the beginning of 2016.
Mortgage rates have taken an unexpected dive in the first two months of 2016. According to a report from the Washington Post, industry experts expected interest rates to increase after the Federal Reserve boosted the baseline rate, but were stunned to realize that the opposite had occurred.
The Federal Reserve had kept interest rates low since the pains of the Great Recession, but they were prepared to hike them to increase the cost of borrowing money. Analysts predict that the dip could spur a rush to open new mortgages for homes around the country.
The rates on a 30-year fixed rate mortgage dropped to 3.62 percent, approaching the all-time low and well below the rate of 4.01 last December. The numbers were derived from a weekly survey by Freddie Mac, a national mortgage lender.
There are likely many factors that have contributed to the drop in mortgage rates, despite predictions that it wouldn’t decrease. Analysts suspect that the slowdown of the global economy has benefited many Americans in the form of cheap gasoline and cheaper loans.
As worries about China’s economic prospects grow, the ripples affect nearly every other aspect of the global economy. Recoveries in Europe and Japan have slowed in recent months, and leaders are growing increasingly worried about their ability to jumpstart their economies.
The economic downturns elsewhere in the world have offered Americans relief at home as people look to snap up properties at a low cost. The U.S. housing inventory dipped 2.2 percent this January compared to last year’s level. The stock can be expected to continue to decline as long as borrowing costs stay low.
The dip in rates also offers a small breath of relief in the household budget. But will the good times last? Cheap mortgage rates have gotten us into trouble before, and the majority of people are reluctant to repeat the mistakes of 2008.
A press release describing the minutes from the most recent Federal Reserve meeting about the decision on whether or not to increase rates can be found here.