As mortgage rates settle comfortably in the 6% range, with the 30-year fixed rate loan averaging 6.66% this week, home buyers are starting to make their way back into the market. According to the Mortgage Bankers Association, mortgage applications for home purchases, which serve as a gauge for future home sales activity, saw a notable increase of about 6% last week. This surge in activity is a positive sign for the housing market.
Furthermore, there is a growing sense of optimism among Americans regarding mortgage rates dropping even further in the coming year. Fannie Mae’s latest consumer survey reveals that people are feeling more hopeful about the prospect of lower rates. This sentiment is significant as it suggests that consumers anticipate a potential easing of home affordability pressures in 2024.
Mark Palim, the deputy chief economist at Fannie Mae, explains, “A more optimistic rate outlook among consumers may signal an expectation that home affordability pressures will ease in 2024.” He adds that homeowners have consistently expressed concerns about high mortgage rates being the primary reason for it being a challenging time to buy or sell a home. Therefore, a more positive outlook on mortgage rates could encourage some homeowners to list their properties for sale, ultimately increasing the supply of existing homes in the new year.
It’s worth noting that mortgage rates have dropped by approximately a full percentage point since October. This decline in rates provides an additional incentive for potential homebuyers to enter the market and take advantage of the more favorable conditions.
According to Jessica Lautz, deputy chief economist at the National Association of REALTORS®, home buyers are feeling more confident thanks to lower mortgage rates. This allows them to plan their budgets more effectively. Unlike last fall, when rates experienced significant fluctuations, potential buyers now have the assurance that the homes they view are within their price range.
For instance, a $400,000 home, which is the median price nationwide, would result in a monthly mortgage payment of $2,056 (assuming a 20% down payment) at today’s average rates, as stated by Lautz.
While the spring season is expected to bring more buyers into the market due to declining mortgage interest rates, there is a concern that bidding wars may intensify in areas with limited housing inventory. This could potentially drive up home prices. Even in the previous year, when mortgage interest rates were higher and there were fewer buyers, the biggest challenge for home buyers was finding the right home. This is where REALTORS® play a crucial role, assisting buyers with negotiations and helping them find their perfect home.
Freddie Mac has released its latest report on mortgage rates for the week ending Jan. 11. Here are the national averages:
1. For 30-year fixed-rate mortgages, the average rate increased to 6.66% from last week’s 6.62%. Compared to a year ago, the rates have gone up from 6.33%.
2. As for 15-year fixed-rate mortgages, the average rate slightly dropped to 5.87% from last week’s 5.89%. However, when compared to the same time last year, the rates have risen from 5.52%.
These figures provide valuable insights into the current mortgage market trends.
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