Mortgage rates are “tumbling” after Silicon Valley Bank’s sudden collapse, and one expert says borrowers can take advantage of current volatility — that’s how much you could save on your home loan

Mortgage rates are “tumbling” after Silicon Valley Bank’s sudden collapse, and one expert says borrowers can take advantage of current volatility — that’s how much you could save on your home loan

After five weeks of bullish momentum, mortgage rates unexpectedly fell this week, which could draw potential buyers back into the market.

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“Last week was a whirlwind of economic indicators and unforeseen events that sent mortgage rates tumbling.” writes Hannah Jones, Business Analyst at

Although the Fed indicated earlier last week that the policy rate might see larger hikes to cool inflation, recent crises in the banking sector sent investors into a spiral.

“The failure and resulting bailout of Silicon Valley Bank led to heightened investor concerns about more bank closures, which drove activity towards government bonds, leading to falling 10-year Treasury bond yields and a fall in mortgage rates,” says Jones.

30-year fixed-rate mortgages

The average 30 years fixed rate fell to 6.60% this week compared to last week’s average of 6.73%. A year ago at this time, America’s most popular home loan average was 4.16%.

While this decline has made home buying more affordable for many Americans, Nadia Evangelou, senior economist for the National Association of Realtors (NAR), said believes Interest rates could fall further depending on the financial market and the Fed meeting next week.

“At today’s rates, many can afford to buy a house at the average price because they have less than 25% of their gross income to spend on a monthly mortgage payment,” she says.

“If interest rates continue to fall to 6%, buyers can buy the house at the median price by putting down 14%, which was the median down payment by buyers in 2022.”

Interest rate trend for 15-year fixed-rate mortgages

The average 15 years fixed rate also fell slightly this week from 5.95% to 5.90%. A year ago this time, the 15-year fixed rate averaged just 3.39%.

“The turmoil in the financial markets is putting significant downward pressure on interest rates, which should benefit borrowers in the near term,” says Sam Khater, chief economist at real estate giant Freddie Mac.

He encourages buyers to take advantage of the volatility and look for additional rate offers before committing to a home loan.

“Our research concludes that taking the time to shop with multiple lenders could potentially save homebuyers $600 to $1,200 annually.”

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Luxury home buying is on a record slump

Wealthy homebuyers have also experienced sticker shock in the market. Luxury home sales in the U.S. fell 44.6% year over year in the three months ended January 31 to the second-lowest level on record. reports Real estate agent Redfin.

The median selling price is also up 9% from the same period last year to $1.09 million, near the all-time high of $1.1 million set in spring 2022. However, there could still be a “silver lining” for potential buyers, according to Redfin economic research leader Chen Zhao.

Zhao points out that competition is limited and jumbo loan Often have lower mortgage rates compared to other types of loans because there is less risk of high-end buyers defaulting on their mortgages.

“Wealthy home seekers also often get additional interest rebates from their banks as a perk for holding substantial funds.”

Zhao recommends buyers look around for the best possible mortgage rate and ask their preferred lender to match the lowest offer.

Mortgage demand continues to grow

Thanks to lower interest rates, demand for mortgages has increased by 6.5% since last week, according to the Mortgage Bankers Association (MBA).

“Home purchase applications increased for the second straight week, but remained nearly 40% below the pace of a year ago,” said Joel Kan, MBA vice president and associate chief economist.

“While lower interest rates should boost housing demand, volatility in financial markets could prompt buyers to pause their decisions.”

The fall in interest rates also encouraged some borrowers to refinance their home loans as refinancing activity increased by 5% – although it is 74% lower than the same week a year ago.

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This article is informational only and should not be construed as advice. It is provided without any guarantee.

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