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Mortgage rates are as low as they’ve been in all of 2017. There are a few reasons for this, but it’s been a while since locking your mortgage rate looked this good. As of this writing, you can get a rate as low as 3.625% (3.902% APR) on a conventional 30-year fixed loan.

Mortgage rates change every day with market conditions and sentiment. If you’re ready, it’s a great time to lock your rate now, because no one can predict how long this opportunity will be available.

Why have rates dropped now, and what do people looking to buy or refinance need to know about rates? We’ve got the details for you.

Uncertainty and the Bond Market

Various events taking place around the world right now are causing uncertainty in the economy and in the financial markets. When things are uncertain, this can cause mortgage rates to drop quite a bit because money is flowing from stocks into the safer investments of the bond market.

We don’t often think of it this way, but when we get a mortgage, it’s packaged with a bunch of other ones with similar characteristics into a mortgage-backed security (MBS) bond sold on the bond market. When money flows from stocks into bonds, investors buy more of every type of bond, including mortgage bonds.

The recent flow of money back into the bond markets has caused mortgage rates to drop to a 10-month low today.

Looking to Purchase or Refinance?

Now that you have the why, what does this mean for you if you’re looking to buy or refinance? Let’s take a look at a couple of examples.

If you plan on being in your home for a while, it may make sense to pay for a couple of prepaid interest points to lower your rate. Each point costs the equivalent of 1% of the loan amount, and you can purchase points to buy down your rate even more so you can enjoy both a lower monthly payment and save thousands in interest.

If you pay for two points on a $200,000 loan over a term of 30 years, you would pay $4,000 upfront (2% of the loan amount). However, you save on your monthly payment and save thousands in interest over the life of the loan.

Feel free to try your own numbers with our amortization calculator.

This is an incredible time to get a mortgage, but we don’t know how long these rates will last. If you’d like to get started with a purchase or refinance, you can do so online or contact one of our Home Loan Experts at (800) 785-4788. If you have questions, you can leave them in the comments.

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