Although Connecticut is one of the wealthiest states in the nation, it doesn’t break the top ten in terms of average home prices. The state’s real estate values took the biggest tumble during the housing crisis, and and the market isn’t as close to recovery as analysts would like to see. Today’s Connecticut mortgage rates are quite affordable and are following the trends seen in the rest of the country, making it a great time to purchase a new home in the Nutmeg State.
What are the Current Connecticut Mortgage Rates?
As of early 2016, Connecticut mortgage rates for a 30-year conventional fixed-rate loan is 3.77 percent and 2.84 percent for a 15-year fixed-rate loan. The refinance rates on these same loans is quite similar at 3.73 and 2.81 percent respectively.
Rates vary a bit by lender and by city. If you were to take out a 30-year fixed-rate $260,000 mortgage and you have a high credit score and 20 percent to put down on your new home in the Stamford area, rates will typically vary from 3.5 percent with zero points to 4.125 percent. That same loan in New Haven is likely to cost you anywhere from 3.5 to 4.279 percent.
The amount of your down payment is important in this market. If you have less than 20 percent to put down, you may narrow your choice in mortgage lenders and you may be subject to private mortgage insurance (PMI) payments until you have a 20 percent equity in your new property.
What Factors Might Offset the Benefit of Low Interest Rates?
With interest rates that are still low and home prices that are more than 20 percent lower than they were at their peak, Connecticut offers some appealing home property buys. However, the state has the sixth highest average real estate taxes and the fifth highest average vehicle property taxes in the country. If you’re moving from one part of the state to another, you’re already paying these higher rates. But for a family moving into Connecticut from a state with relatively low tax rates, the additional expense tacked onto the mortgage payment may come as a shock.
In fact, Connecticut has average annual property taxes of $3,301, which can bump up your monthly mortgage payment by $275. Average vehicle property taxes average $630 per year.
How Does Connecticut Compare to the Rest of the Country?
As one of the wealthiest states in the country, Connecticut has historically seen real estate prices that are higher than most other states. Though prices are still high with average Connecticut home prices at $269,900 compared to the U.S. average of $212,371, the picture has changed drastically since the housing crisis.
Average prices don’t always tell the whole story. If you take a look at the average prices between the major metros, you’ll see wide swings. Stamford and Norwalk top the state with average home values between $377,000 and $456,000, while Hartford and Waterbury are completely different with average homes values of just $89,000 to $99,000.
What is the Forecast for the Connecticut Housing Market?
Some analysts believe that luxury homes in Connecticut were overpriced to begin with and those areas may never see home values return back to what they were before the housing crisis, but others disagree. The numbers tell the true story. The sale of single family homes overall in the state increased by 7.14 percent in 2015, where the luxury market saw an increase of just over one percent.
The recent federal interest rate hike is not anticipated to have much of an impact on those who are buying homes over the next year with a conventional mortgage, and home values are expected to remain stable. Rental prices in the state, however, may drive a whole new demographic into the home buying market. Like the rest of the country, rental prices are on the rise. In Connecticut, the average rental is now $1,746, which is quite a significant difference from the rest of the nation, which averages $1,380. As these renters become buyers and they enter the housing market, the increased demand may in turn lead to an increase in home prices.
What happens to the Connecticut housing market and Connecticut interest rates will ultimately be tied to the overall economy and employment outlook, which is rather bleak at the moment. The Connecticut Center for Economic Analysis reveal a revised forecast during the summer of 2015 that predicts stalled job growth in the state in the near future. In fact, Connecticut’s employment is still 22,000 jobs below its pre-recession peak, and that’s not expected to change any time soon.
All of this coupled with the recent announcement of General Electric’s move of its corporate headquarters from Fairfield to Boston, taking thousands of jobs with it, chances are that buyers will continue to find a wealth of value-priced homes in Connecticut for some time to come.
How Does All of This Impact Home Buyers in Connecticut?
With a weak economy, stalled job growth, and low interest rates, you’ll most likely be able to find the home of your dreams in Connecticut. The biggest hurdle will be making sure you have a job to pay for it. Don’t expect mortgage rate changes to impact you over the next few years, but lenders will still be looking at buyers with an exacting eye.
To get the best deal on Connecticut interest rates, be ready to put 20 percent down on your new home and clean up your credit so that it’s 700 or higher. If your credit score is a little lower, you may wind up paying some points up front on your mortgage or paying a slightly higher rate, but you should still be able to get the mortgage you want. If you don’t have 20 percent to put down on your home, you may be required to take on private mortgage insurance (PMI) and/or pay a slightly higher interest rate. Try to come up with at least 10 percent down, and you might be able to convert the lender to lender-paid mortgage insurance (LPMI) which will keep your monthly payments affordable.
2 Point Highlight
Today’s Connecticut mortgage rates are quite affordable and are following the trends seen in the rest of the country, making it a great time to purchase a new home in the Nutmeg State.
With interest rates that are still low and home prices that are more than 20 percent lower than they were at their peak, Connecticut offers some appealing home property buys.
