Interest rates are on the decline! They’ve hit a four-month low for the average 30-year fixed rate mortgage. This drop in rates marks the sixth consecutive weekly decline, reflecting the recent downward trend in the 10-year Treasury yield, which significantly impacts loan pricing.
According to Freddie Mac, the average rate for a 30-year mortgage dropped to 7.03% from 7.22% last week. The last time rates were lower was back in early August, at 6.96%. Similarly, 15-year fixed-rate mortgage rates, particularly popular among homeowners refinancing their loans, also experienced a decrease this week. The average rate fell to 6.29% from 6.56% last week.
The hope for reduced interest rates stems from the belief that the Federal Reserve might halt its interest rate hikes to manage lower inflation. Ing Economics predicts the Federal Reserve will start a series of interest rate cuts in Q2 2023. They cite moderating inflation and a softening job market as key factors and are expecting six rate reductions extending into 2025!
Despite these welcomed declines, Sam Khater, Freddie Mac’s chief economist, suggests that mortgage interest rates will need to drop further to consistently stimulate demand in the housing market.
This downward shift in mortgage rates is good news for potential homebuyers struggling with an increasingly unaffordable housing market. Although home sales have declined by 20.2% through the year’s first ten months, home prices continue to rise due to a shortage of available properties. However, the easing mortgage rates have a positive impact, enhancing the purchasing power of borrowers and enabling them to afford more expensive homes.
Projections by housing economists indicate that mortgage rates will continue to decrease in 2024. It’s never too early to start planning for your home purchase. Reach out to us today to get the conversation started so you’re prepared when the time comes to make your move!