Where did rates end in the month of March?

30 Year Fixed Rate Conventional Average: 7.298%

30 Year Fixed Rate FHA Average: 7.075%

30 Year Fixed Rate VA Average: 7.04%

Disclaimer: The mortgage rates provided are sourced from a database reflecting lenders’ current pricing and fees for informational purposes only, not as an offer or commitment to lend. Rates are subject to change and may not apply to all borrowers. This information does not constitute financial or legal advice.

What happened this month in the mortgage and real estate space?

March witnessed a pivotal meeting by the Federal Open Market Committee (FOMC), a cornerstone event influencing the financial landscape. For individuals unfamiliar with the intricacies of financial policies, here’s a simplified overview of the outcomes and their implications:

1. Steady Rates: The FOMC maintained the Federal Funds Rate at a target range of 5.25% to 5.5%, marking the fifth consecutive meeting without a change. This decision reflects ongoing concerns over inflation levels, which, despite easing, remain higher than desired.

2. Future Projections: The March dot plot, an indicator of future rate expectations among Fed officials, suggests an anticipation of 75 basis points in rate reductions within the year. This projection is significant for planning and forecasting in financial markets.

3. Balance Sheet Policies: The Fed confirmed continuity in its balance sheet reduction strategy, affecting Treasury securities, agency debt, and mortgage-backed securities. Such policies play a crucial role in influencing overall market liquidity and interest rates.

Personal observations from the meeting suggest a cautiously optimistic stance from Jerome Powell and the Federal Reserve. Despite prevailing uncertainties, there’s a palpable sense of optimism regarding potential rate cuts later in the year, a sentiment that contributed to a modest dip in mortgage rates in March.

Let's Talk About Consumer Debt

In an era marked by escalating personal and credit card debt, reaching a collective $25.4 trillion with credit card debt alone surpassing $1.4 trillion, the financial strain on individuals is intensifying. The average credit card interest rate has soared to an unprecedented 24.66%, placing a heavy burden on those carrying balances, particularly in a time when the cost of living is surging across various sectors. If you don’t get scared by the amount of debt we have as a country, you should watch it live.

Amid these challenges, homeowners may find a beacon of relief through strategic financial management, specifically via cash-out refinancing or obtaining a Home Equity Line of Credit (HELOC). Though not universally applicable, many could benefit from consolidating high-interest debt under a potentially lower interest rate tied to their home equity.

Illustrative Scenario:

A homeowner with a $500,000 property and a $250,000 mortgage at 5% interest faces considerable monthly outlays when including $20,000 in personal loans and another $20,000 in credit card debt. By consolidating these debts through refinancing, not only could the monthly financial burden be reduced, but additional cash flow could be liberated for other essential or emergency needs.

Let’s do the math.

Current Situation:

• Current Mortgage Payment: $1,342

• Credit Card Minimum Payment: $500

• Personal Loan Minimum Payment: $700

• Total Current Monthly Expenses: $2,394

Cash Out Refinance Numbers:

• Updated Loan Balance: $250,000 (current loan balance) + $40,000 (consumer debt) + $5,000 (estimated loan costs to refinance) = $295,000

• Interest Rate: 7%

• Proposed Payment: $1,962

All together monthly payment savings: $2,394 (current total monthly expenses) - $1,962 (New Payment) = $432 monthly payment savings

Moreover, with the potential for future interest rate declines, homeowners could eventually secure even more favorable terms with a rate and term refinance, further alleviating the financial pressure and enhancing their capacity to manage personal finances more effectively.