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Just when you thought mortgage rates wouldn't drop any further, they have. Last week, the average interest rate on a 30-year fixed mortgage fell to 2.72%, reports Freddie Mac. That's the lowest level on record in almost 50 years. The 15-year fixed mortgage, meanwhile, dropped to 2.28%.

If you've been thinking about getting a mortgage, you may be eager to capitalize on these astoundingly low rates. But while rates themselves may be extremely appealing these days, the housing market is a different story. 

Inflated home prices are offsetting low rates

A 2.72% interest rate on a 30-year loan means that for every $100,000 you borrow, you'll pay $406.87 in principal and interest on your loan each month. (You can use this handy mortgage calculator to run the numbers based on the loan amount you're likely to end up with.) But while that's a really good deal, don't forget that home prices have shot up because there's a limited amount of available inventory on the market.

Many sellers have held off on listing their homes during the pandemic, so right now, if you look for a home in your target neighborhood, you may find that you're limited to just a few options within your price range. Plus, you may discover the average price of a home in your ideal neighborhood is $20,000, $30,000, or even $40,000 more than it was this time last year. 

Overpriced homes don't just cost you more money. In some cases, they can actually prevent you from getting a mortgage. For your home loan to actually go through, the property will need to appraise for a high enough value. If an appraiser determines that the home you want to buy is not worth the price you're being asked -- or feeling pressured -- to pay, then your mortgage may be denied, even if you've otherwise been approved. 

So despite the fact that mortgage rates have reached yet another record low, now may not be the best time to try to get a home loan. If you attempt to capitalize on the great deals mortgage lenders are offering, you may also wind up overpaying for a home or settling for one because of limited options on the market. 

Will mortgage rates continue to drop?

In the absence of a crystal ball, it's impossible to predict whether mortgage rates will continue to dip lower before creeping back up. But based on the state of the economy, there's a good chance that rates will, in fact, remain low for quite some time. So if you're not pleased with the homes for sale in your neighborhood right now, it could pay to wait a few months and see if inventory opens up. Remember, the difference between a 2.72% mortgage and a 2.82% mortgage isn't all that substantial (for a $100,000 loan, it's an extra $5.09 in principal and interest per month). So rather than worry about whether you'll get the lowest mortgage rate ever, focus instead on finding an affordable home you love while rates are still competitive.