After five weeks of upward momentum, mortgage rates unexpectedly eased this week, which could draw potential buyers back into the market.
“The past week was a whirlwind of economic indicators and unexpected events that sent mortgage rates up again,” writes Hannah Jones, Economic Research Analyst at Realtor.com.
Despite the Fed suggesting early last week that federal funds rate May see bigger hike to bring down inflation, recent crises in banking sector have enthused investors.
“The Silicon Valley bank failure and resulting bailout fueled investor concern of additional bank closures, which drove activity toward Treasury bonds, resulting in lower yields on 10-year Treasuries and lower mortgage rates,” Jones says.
30 year fixed rate mortgage
average 30 year fixed rate It fell to 6.60% this week compared to last week’s average of 6.73%. The average for America’s most popular home loans at this time a year ago was 4.16%.
While the downturn has made home buying more affordable for many Americans, Nadia Evangelou, senior economist at the National Association of Realtors (NAR), believes that Depending on the financial market and the Fed meeting next week, rates may fall further.
“At today’s rates, many people can afford a median-priced home because they need to spend less than 25% of their gross income for monthly mortgage payments,” she says.
“If rates fall to 6%, buyers would be able to buy an average priced home for 14% less than the average down payment for buyers in 2022.”
15 year fixed rate mortgage rate trend
average 15 year fixed rate also eased slightly to 5.90% from 5.95% this week. This time a year ago, the 15-year fixed rate averaged just 3.39%.
“The turbulence in the financial markets is putting significant downward pressure on rates, which should benefit borrowers in the short term,” They say Sam Khater, chief economist at housing giant Freddie Mac.
He encourages buyers to take advantage of the volatility and find additional rate quotes before settling on a home loan.
“Our research concludes that homebuyers can potentially save $600 to $1,200 annually by taking the time to shop among multiple lenders.”
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There is a record decline in the purchase of luxury homes
Wealthy homebuyers are also facing sticker shock in the market. Sales of luxury homes in the US fell 44.6% year-on-year to their second lowest level during the three months ended January 31. reports Real estate brokerage Redfin.
The average sale price also jumped 9% since the same period last year to $1.09 million, nearing an all-time peak of $1.1 million in the spring of 2022. However, there may still be a “silver lining” for potential buyers, according to Redfin. Economics Research Head Chen Zhao.
Zhao points out that competition is limited and jumbo loan Often have lower mortgage rates than other loan types, as there is less risk that high-end buyers will default on their mortgages.
“Wealthy house hunters are also often offered additional rate discounts for saving extra money from their banks.”
Zhao recommends that buyers shop around for the best possible mortgage rate and ask their preferred lender to match the lowest bid.
Mortgage demand continues to rise
According to the Mortgage Bankers Association (MBA), demand for mortgages increased 6.5% from the previous week due to lower rates.
“Applications to buy homes rose for the second week in a row but remained about 40% below last year’s pace,” says Joel Kahn, vice president and deputy chief economist at MBA.
“While the lower rates should spur a spurt in housing demand, volatility in the financial markets could cause buyers to hold off on their decisions.”
The drop in rates encouraged some borrowers to refinance their home loans, as refinancing activity increased by 5% — though down 74% from the same week a year ago.
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