According to BankRate.com, as of September 17, 2024, the current average 30-year fixed mortgage interest rate is 6.34%, down five basis points from a week ago. The average national interest rate for a 30-year fixed refinance is also 6.34%, with no change from the prior week.
The lower mortgage interest rates are driven by the expectation that, due to lower inflation, the Federal Reserve will reduce rates during today’s meeting. Keep in mind that, when there’s a reduction in the rate at which banks borrow, it typically drives down home loan costs.
What Happens When Mortgage Interest Rates Decrease
Lower interest rates make buying a home more affordable because monthly loan payments are lower. In turn, this drives up the demand for homes to buy. As a result, rising demand usually drives up home prices. If demand is higher than the available inventory of homes for sale in the real estate market, prices can increase even more.
Is It A Good Time For Retirees To Downsize?
For retirees thinking about downsizing their homes, this may be a good time to put out the “For Sale” sign. According to Redfin, the average price of a home in the U.S. is currently more than $430,000. Even if real estate inventory increases, sale prices are expected to continue rising. If you have a good amount of equity in your home, you can use the proceeds from the sale to buy a smaller home in cash or take a new loan at a lower rate.
“Of course, as a mortgage-free homeowner, you have the luxury of biding your time to see if interest rates drop even further, as some experts predict.”
What If Your Mortgage Is Paid Off?
If you’re mortgage free that may be a good incentive to stay in your home. However, when you consider that interest rates on refinanced loans are also falling, it may be worth tapping into your home equity. You can use some of the funds to invest in your retirement nest egg or set up an emergency fund. Of course, as a mortgage-free homeowner, you have the luxury of biding your time to see if interest rates drop even further, as some experts predict. With the current national rate of home appreciation averaging 14.5% year over year, it all adds up to an even higher profit if or when you decide to sell your home in the future.
Before you decide, connect with an FRC® trained advisor who can give you a second opinion on whether you should sell your home now that interest rates are on the decline.
