Mortgage rates across the U.S. have fallen to an eight-year low, a boon for house-hunters and homeowners looking to refinance.
The average 30-year mortgage is charging 3.34% interest, while 15-year home loans are at 3.09%, according to Mortgage News Daily. That's down more than a full percentage point in just 12 months: Average rates were 4.57% and 4.14%, respectively, this time last year.
Lower rates mean homeowners can pay less for their total loan — principal plus several decades of interest payments — over the long life of a mortgage. Indeed, someone with a decent credit score who is shopping for a home today is likely to get the cheapest interest rates in years, experts said.
"At no time in modern economic memory have mortgage rates been able to move significantly or aggressively lower than they are right now," Mortgage News Daily's Chief Operating Officer Matthew Graham said in a Monday analysis of the latest interest rates.
Several factors are pushing down mortgage costs. The Federal Reserve has kept rates low after cutting them three times last year amid signs of economic weakness, while inflation remains tame.
"And once [banks] start to expect that, they're willing to lend money over the long run at lower interest rates," said Bob DeYoung, an economist and business professor at the University of Kansas.
Another reason mortgage rates have receded: European and other overseas investorslike the spreading coronavirus disease have scooped up U.S. Treasuries, pushing down bond yields. Banks typically keep mortgage rates slightly above Treasury rates, so home loan costs have declined in turn.
Wall Street traders on Monday sought safety in U.S. government bonds, gold and high-dividend stocks like utilities and real estate as the Dow fell. The yield on the 10-year Treasury fell to the lowest level in more than three years.