After surging in the wake of the election, mortgage rate are back on the decline. The average rate for a 30-year fixed rate mortgage was 3.97 percent for three-day period ending April 19th according a release from Freddie Mac this morning. Lower rates should help consumers currently in the market, but rates are still expected to rise through the year.

The recent decline in rates was driven by a movement of money out of stocks and into bonds. This shift was initially driven by a realization that tax reform and other pro-growth policies might take longer to implement than expected. Then an increase in international tensions drove investor further towards bonds as a safe haven.

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The most recent reading is 35 basis points lower than the post-election peak of 4.32 percent from the last week in December. That decline translates into a $40 reduction in the monthly payment on a $200,000 mortgage. While this is an improvement, it remains $51 higher than the monthly payment at 3.52 percent, the rate recorded just before the election.

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While higher rates will weigh on affordability, they are not necessarily a bad thing if they are the result of a stronger economy and if they bring stronger income growth as a result. Income growth can offset rising rates, stabilize household balance sheets, and drive growth. NAR is forecasting the average rate for a 30-year fixed rate mortgage to finish 2017 near 4.6 percent before rising to an average of 5.0 percent in 2017.

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