Even small rate moves can have a big impact on homebuying, especially since so many buyers today are facing overheated home prices and are therefore on the edge of being able to afford a home at all. Looking at the 30-year fixed rate on a $300,000 mortgage, every 25 basis point move down means a savings of $50 on a monthly payment. With the rate now down about 75 basis points from November, that’s a savings of $150 per month.
The drop in rates helps both potential buyers and current homeowners who might be able to benefit from a refinance — but it all comes with a caveat. The Fed isn’t raising rates because the economy is weakening.
“While a plus for homebuyers, if concerns about the economic outlook rattle consumer and homebuyer confidence, it could offset the benefit of lower mortgage rates,” noted Danielle Hale, chief economist at realtor.com.