Mortgage rates near 6% unleash hordes of homebuyers and even lower rates may be on the way – but economists warn consumers are still ‘not invincible’
Refusing to let a good chance pass, a wave of homebuyers triggered this week as mortgage rates slipped further and further down near the 6% mark.
“The exchange rate is at its lowest level since September last year, boosting both homebuyer demand and homebuilder sentiment.” write Sam Khater, chief economist at housing giant Freddie Mac.
At the same time, analysts warn that buyers who haven’t made their move will need to keep an eye on this volatile economy, as mortgage rates aren’t the only factor. affect ability to pay.
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30 year fixed rate mortgage
Medium 30 years fixed interest continued to decline to 6.15% this week, compared with 6.33% last week. At this time a year ago, the average rate was 3.56%.
“With the Fed tightening monetary policy, the US housing market has come under significant pressure. While our 2023 forecast predicts ongoing inflation that will pressure interest rates, recent favorable data has helped drag mortgage rates down.” speak Realtor.com economist Jiayi Xu.
“As the economy weathers easing inflation, mortgage rates could continue to hover in the short term, in the 6%-7% range we’ve seen over the past five months.”
Of course, Xu admits, mortgage rates are still sky-high compared to last year, creating a “financial barrier” for many buyers.
15 year fixed rate mortgage
Average rate per 15 years home loan down from 5.52% to 5.28% this week. This time a year ago, the 15-year fixed rate was 2.79%.
Nadia Evangeliou, senior economist for the National Association of Realtors, believes rates could fall even further.
“The drop in mortgage rates creates an opportunity for many buyers,” Evangeliou said.
“Lower mortgage rates reduce monthly payments. Since interest rates peaked recently in mid-November, buyers can save around $300 per month at nearly 6% interest.
Mixed economic data makes analysts wary
Latest government data shows inflationary fell from 7.1% in November to 6.5% in December. At the same time, US retail sales in December fell the most in 12 months, signaling weak consumer demand.
Savings are near record lows and consumers increasingly rely on their credit cards, making home ownership increasingly out of reach for many Americans.
“Although December’s slower inflation rate is a positive sign, concerns among businesses and investors about economic growth continue to mount as retail sales data continues to grow,” Xu wrote. weaker reminds us that the American consumer is not invincible.”
Xu noted that while the “national unemployment rate remained at a long-term low” in December, the tech industry in particular reported thousands of layoffs.
Mortgage applications spike
According to the Mortgage Bankers Association (MBA), mortgage demand has increased by 27.9% from the previous week.
Mortgage application activity rebounded strongly in the first full week of January, with both refinancing and purchases growing by double-digit percentages from the previous week, including the previous week. New Year holidays,” speak Mike Fratantoni, senior vice president and chief economist at MBA.
“As we head into the spring homebuying season, lower mortgage rates and more homes on the market will help afford first-time homebuyers.”
Refinancing activity also increased by 34%, although this is still 81% lower than the same period last year.
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