By Camille Brooks | M•I•A MEDIA GROUP
The average U.S. rate on a 30-year fixed mortgage fell to 7.18% for the week ending Nov. 5, its third consecutive weekly decline, according to Freddie Mac. The rate was down from 7.24% a week earlier but remained well above the 6.22% average from a year ago. The average 15-year fixed rate also edged lower, falling to 6.57% from 6.60%.
For buyers who have spent months recalculating what they can afford, the direction is welcome. The size of the latest drop tells a more restrained story. On a $400,000, 30-year loan, the move from 7.24% to 7.18% lowers monthly principal and interest from about $2,726 to $2,710, a savings of roughly $16. At last year’s 6.22% average, the same loan would have cost about $2,455 a month. That leaves today’s borrower paying about $255 more each month on the same amount of debt, before taxes, insurance or association dues.
In South Florida, the mortgage is only part of the bill
The rate decline comes as asking prices have eased in parts of South Florida. A September market snapshot from Fortune Christie’s International Real Estate, using Realtor.com data, put the median listing price at $589,000 in Miami-Dade County, $380,000 in Broward County and $472,000 in Palm Beach County. Those asking prices were down 1%, 5% and 3%, respectively, from a year earlier. Listing prices reflect what sellers are asking, and countywide medians can shift with the mix of homes on the market.
For a household shopping across county lines, the property itself can make a bigger difference to the monthly budget than the latest move in rates. Two homes with the same asking price can carry different property taxes and insurance costs. A condo can have a lower purchase price but substantial monthly association dues. The Consumer Financial Protection Bureau advises buyers comparing loan offers to look at the full monthly payment and the cash needed at closing, along with lender fees and credits. A lower rate can come with higher upfront charges, so the size of the payment is only one part of the comparison.
What the decline means for homeowners
For people who already have a fixed-rate mortgage, the decline leaves their principal and interest payment unchanged. A homeowner who borrowed at a higher rate might find a refinancing offer worth evaluating, but the savings depend on the lender’s quote, the closing costs and how long the borrower expects to keep the new loan. For example, if a refinance costs $3,000 upfront and saves $100 a month, it would take about 30 months to recover the upfront cost on a simple cash-flow basis. The loan term matters, too, because stretching repayment over more years can lower the monthly bill while increasing the total interest paid.
Freddie Mac’s weekly survey is a national benchmark, and borrowers’ actual quotes can vary by lender and change from day to day. For South Florida buyers, the latest decline offers a little more room in the budget. Whether it is enough to make a purchase possible will depend on the home’s price, the cost of insuring it and how much cash the buyer needs to close. Those figures can turn a $16 monthly improvement into either a welcome bit of breathing room or a small change in a search that still requires a different price range.
