Like most of the country, North Dakota mortgage rates went down slightly in March of 2016 with stable housing reports bolstering the confidence of the real estate industry in general. If you are looking to buy a house in North Dakota, then you need to understand the onus behind the market movements. Here is your report on the mortgage rates that North Dakota banks are offering now and what you may expect in the future for the rest of 2016.
What did North Dakota mortgage rates look like in March 2016?
North Dakota experienced a fairly stable mortgage rate over the entire month of March in 2016. The benchmark mortgage rates for 30 year fixed terms with at least 20 percent down and a 740 credit score was 3.52 percent, a decrease of 0.02 percent over last month. 15 year plans had a very attractive 2.78 percent rate, a decrease of 0.01 percent from February, and 5/1 year ARM rates stood at 3.07 percent, dropping 0.1 percent. These rates were among the lowest in the nation because of the many local banks that competed against the larger branches of the international financial institutions in the area. Outside of a very short jump in the 30 year fixed mortgage rate during the last week of the month, the mortgage rates remained virtually flat when charted out.
Why are North Dakota mortgage rates so low?
North Dakota consistently has one of the lowest unemployment rates in the nation: It currently stands at 3.1 percent. The oil boom in the state is bolstering the entire state through ancillary supply industries and other verticals; fast food workers in the area start out at $15 per hour and may hit $20 per hour before they even take a management position. During the absolute worst part of the housing crisis, the unemployment rate hit a high of 4.3 percent, which is normally considered full employment under normal circumstances because of the natural flow of employment in the market. Life overall is good in North Dakota, and even the recent volatility in the foreign oil market has not seemed to rock the local economy.
As a result of easily flowing money in the area, North Dakota banks have no problem extending credit at lower rates than competing banks around the nation. Because of the volume of business that is swirling around in the state’s credit industry, the local banks in North Dakota have the leverage to compete with the big boys like Bank of America and HSBC with no problem. The result is a buyer’s market that always brings lower mortgage rates.
Can North Dakota housing keep up with the employment demand?
There are more jobs than houses in North Dakota. This would normally cause a seller’s market, but the country is behind the oil industry in the area. The United States Department of Housing and Urban Development (HUD) recently announced just under $2 million in grants for housing in the area, basically subsidizing the area with government money for people without housing in the area. Native American tribes in the area are getting $200,000 from the federal government to help people in public housing find jobs. In short, everyone is doing everything they can to make sure that the economy of North Dakota stays a free flowing, cash rich economy. Combined with the already freely flowing credit in the area, and you get a robust financial market with no need for high interest rates.
As developers around the state begin to ramp up to keep up with demand, the new building starts continue to help the economy by increasing the volume of cash flow in the area. Big projects mean more jobs for construction workers, catering companies, and home engineering companies. The employees of these companies will then turn around and buy new houses themselves.
What is the prediction for North Dakota for the rest of the year?
Basically, if local oil stays viable, North Dakota mortgage interest rates will stay flat, because they have no reason to move. Volatility in the foreign oil market does not seem to hurt the local North Dakota oil economy; as a matter of fact, it may be helped by it. If oil prices go up, of course North Dakota will benefit. The economy seems to be in a win-win situation in terms of international politics and economics, and there does not seem to be much of an analysis that can justify thinking this trend will end in 2016.
According to Fannie Mae and the Mortgage Bankers Association, the overall mortgage interest rate is expected to go up around one percentage point by the end of the year. If North Dakota sees any increase in its local interest rates, it will likely be because of the policies imposed by the Federal Reserve that force all boats to rise at the same time. However, there seems to be no reason that North Dakota will not continue its trend of incredibly advantageous interest rates for new buyers to the area.
2 Point Highlight
The United States Department of Housing and Urban Development (HUD) recently announced just under $2 million in grants for housing in the area, basically subsidizing the area with government money for people without housing in the area.
If North Dakota sees any increase in its local interest rates, it will likely be because of the policies imposed by the Federal Reserve that force all boats to rise at the same time.
