Americans looking to buy a home this summer may face some of the lowest mortgage rates in a quarter of a century, thanks to the rally in the U.S. bond market.
Interest rates have dropped about 1.5 percentage points since December, as bond prices risen. Mortgage lenders already are seeing more business and anticipating a good summer, with the likelihood that rates will fall more because of a weak economy.
“As soon as rates start to drop and get to the level of 7 percent, that’s almost a magic point,” said Harry Tomlinson, executive vice president at Vernon Hills, Ill.-based PNC Mortgage. “The consumer will be pretty quick” to take advantage of those low rates.
Thirty-year mortgage rates fell to 7.71 percent this week, from 8.26 percent a month ago and 9.25 percent in mid-December, according to the Federal Home Loan Mortgage Corp. With the exception of 1993, rates are now lower than they’ve been since 1972.