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Mortgage Rates Are Dropping Faster Than We've Seen in 10 Years

Doug Whiteman
Mortgage Rates Are Dropping Faster Than We've Seen in 10 Years

Mortgage rates have been sliding for months, and now they're going even faster down that hill.

Over the past week, rates have taken their biggest drop in a decade and have made the dream of buying a home more affordable for many.

Why rates are doing what they're doing

Kristi Blokhin / Shutterstock
Mortgage rates have been falling in a reaction to last week's Federal Reserve meeting.

Lots of people have been saying "Uh-oh" after last week's Federal Reserve meeting, and the slide in mortgage rates reflects that, says Sam Khater, Freddie Mac’s chief economist.

“The Federal Reserve’s concern about the prospects for slowing economic growth caused investor jitters to drive down mortgage rates by the largest amount in over 10 years," Khater says.

But there's no reason to be nervous if you're thinking of putting your home on the market.

"We have recently seen home sales start to recover, and with this week’s rate drop we expect a continued rise in purchase demand," says Khater. Employers are hiring at a healthy pace, he notes, which is boosting demand for homes.

The Fed indicated that the economy is losing steam, and signaled it's not likely to raise interest rates again this year.

Freddie Mac has again lowered its 2019 mortgage rates forecast. It now expects 30-year mortgages will average 4.5% this year, down from last year's average of 4.6%.

In the market for a home loan? Calculate what your mortgage payment will be.

This week's other mortgage rates

Rates on 15-year mortgages are averaging 3.57% this week — down sharply from last week's 3.71%, Freddie Mac says. Last year at this time, those shorter-term home loans were averaging 3.90%.

And 5/1 adjustable-rate mortgages — with rates that hold steady for five years and then can "adjust" up (or down) every year that follows — are now being offered with initial rates averaging 3.75%. That's down from 3.84% last week.

One year ago, those ARMs were offered at an average initial rate of 3.66%.

Before you can get a mortgage, you'll need to have a down payment ready to go. Find a good savings account to help you put that money aside.