One of the hottest topics in the recent housing market is mortgage rates, as they significantly impact home affordability. If you’re planning to move, you’re probably hoping for rates to go down, and based on the past few weeks, that wish might come true.
Recent Drop in Mortgage Rates
There has been a significant change in mortgage rates. After recent economic reports, inflation data, unemployment rates, and the latest comments from the Federal Reserve (Fed), mortgage rates have started to gradually decline. According to Freddie Mac, the current rate has reached a level not seen since February. Take a look at the graph showing this downward trend:
After seeing this graph, you might be tempted to wait and see if rates drop even further. However, it’s important to keep a key perspective in mind: the record-low rates from the pandemic era are now a thing of the past. If you’re hoping to see 3% mortgage rates again, experts agree that it’s unlikely. According to Greg McBride, Chief Financial Analyst at Bankrate, even if mortgage rates are decreasing, it’s important to be realistic about returning to 3%. The best we can hope for over the next year is a range of 5.5% to 6%.
The drop in mortgage rates also signals that many buyers may see this as an opportunity to enter the market.
The Relationship Between Rates and Demand
If you wait for mortgage rates to drop further, competition may intensify as other buyers start searching for homes again.
In the housing market, there is generally a relationship between mortgage rates and buyer demand. Typically, when rates are high, buyer demand is low. But when rates start to drop, the situation changes. Buyers who were hesitant due to high rates begin to search again. According to a recent article from Bankrate:
“If you’re ready to buy, this may be the moment. Home prices have been rising primarily due to the long-standing shortage of homes for sale. This is unlikely to change soon, and if mortgage rates drop below 6%, buyers may flood the market, driving prices even higher and reigniting bidding wars.”
Conclusion
If you’ve been waiting to move, the recent downward trend in mortgage rates might be the signal to take action. Rates have hit their lowest point in months, giving you the chance to get started before other buyers jump in.
If you’re ready, please reach out. I’ll do my best to assist you.
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