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Are you dreaming of owning your own home but struggling to keep up with the rising costs? Well, it seems the winds of change are blowing in your favor! For the third week in a row, mortgage rates have been falling faster than a rock dropped off a skyscraper!

Yes, you read that right – this is not an April Fool’s joke! The average rate on a 30-year fixed-rate mortgage has dropped to its lowest levels in 6 weeks. Mortgage buyer Freddie Mac reported today that the average on the benchmark 30-year rate fell for the third straight week, to 6.32%, from 6.42% last week, according to Freddie Mac. So, what does this mean for you as a potential home buyer or seller? Let’s find out!

Mortgage Rates

Mortgage Rates 

The recent decline in mortgage rates is good news for prospective homebuyers, as many were pushed to the sidelines during the past year as the Federal Reserve cranked up its main borrowing rate nine straight times in a bid to bring down stubborn, four-decade high inflation.

“Economic uncertainty continues to bring mortgage rates down,” said Sam Khater, Freddie Mac’s chief economist. “Over the last several weeks, declining rates have brought borrowers back to the market but, as the spring home buying season gets underway, low inventory remains a key challenge for prospective buyers.”

After hitting a 2022 high of 7.08% in November, rates started 2023 trending down. However, they climbed again in February, after robust economic data suggested the Federal Reserve was not done in its battle to cool the US economy and would likely continue hiking its benchmark lending rate.

Last week the Federal Reserve did raise interest rates — by a quarter point — in an effort to continue to fight stubbornly high inflation while taking into account recent risks to financial stability.

In their latest quarterly economic projections, Fed policymakers forecast that they expect to raise that key rate just once more — from its new level of about 4.9% to 5.1%, the same peak they had projected in December.

mortgage rates fall<br />

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Home Prices & Supply

Also helping buyers, home prices appear to be leveling off. The national median home price slipped 0.2% from February last year to $363,000, marking the first annual decline in 13 years, according to the National Association of Realtors.

One thing that hasn’t gotten much better is the supply of homes. “Over the last several weeks, declining rates have brought borrowers back to the market but, as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers,” said Sam Khater, Freddie Mac’s chief economist.

While recent months have seen a dip in housing prices, the persistently low inventory levels are acting as a crutch for the housing market, preventing it from softening further. With fewer homes available for purchase, competition amongst buyers is more fierce, making it increasingly difficult for first-time homebuyers and those on a tight budget to enter the market.  Buyers continue to be very sensitive to mortgage rates and are expected to eye any more dips this spring as an opportunity. 

 “Pent-up housing demand is evident with every gain in affordability, whether it be softening prices or lower mortgage rates,” said Hannah Jones, economic data analyst at Realtor.com. “As the prime spring buying season takes off, buyers will be looking for well-priced, ready-to-move-in homes.” 

While applications for home purchases and refinances are still well below levels from a year ago, both have increased for four consecutive weeks, according to MBA.

“New and existing supply is still low, but lower mortgage rates and slower home-price growth have improved buyers’ purchasing power this spring,” he said.

 

 

Selling A House Shouldn’t be Stressful

There is a pro-active way to sell your home that gets results

What Impacts Mortgage Rates?

While the Fed’s rate hikes do impact borrowing rates across the board for businesses and families, rates on 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investor expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates can also influence the cost of borrowing for a home.

Treasury yields have fluctuated wildly since the collapse of two mid-size U.S. banks two weeks ago. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, was 3.57% Thursday, but had been above 4% early in March.

 

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What Does The Future Hold?

The housing market outlook remains uncertain because the recent financial market stress has caused banks to tighten lending standards, which could make it harder for prospective homebuyers to borrow. Supply also remains tight, which some economists say could prevent a significant decline in house prices. The recent trend of falling mortgage rates is good news for home buyers and sellers, but there are still challenges that need to be addressed.

If you’re a home buyer, now may be a good time to take advantage of the lower rates and start your home search. If you’re a home seller, the current trend in falling rates could mean increased demand for your home, but you’ll want to work with a trusted real estate agent to ensure that you get the best price for your home.  

If you are considering buying, selling, or investing in real estate and are wondering if NOW is the right time for you, feel free to reach out.  We would love to help guide you to make the best decision for your family!

Selling A House Shouldn’t be Stressful

There is a pro-active way to sell your home that gets results

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