Mortgage rates have been one of the hottest topics in the housing market lately because of their impact on affordability. And if youâre someone whoâs looking to make a move, youâve probably been waiting eagerly for rates to come down for that very reason. Well, if the past few weeks are any indication, you may be getting your wish.
Mortgage Rates Trend Down in Recent Weeks
Thereâs big news for mortgage rates. After the latest reports on the economy, inflation, the unemployment rate, and the Federal Reserveâs recent comments, mortgage rates started dropping a bit. And according to Freddie Mac, theyâre now at a level we havenât seen since February. To help show the downward trend, check out the graph below:
Maybe youâre seeing this and wondering if you should ride the wave and see how low theyâll go. If thatâs the case, hereâs some important perspective. Remember, the record-low rates from the pandemic are a thing of the past. If youâre holding out hope to see a 3% mortgage rate again, youâre waiting for something experts agree wonât happen. As Greg McBride, Chief Financial Analyst at Bankrate, says:Â
âThe hopes for lower interest rates need the reality check that âlowerâ doesnât mean weâre going back to 3% mortgage rates. . . the best we may be able to hope for over the next year is 5.5 to 6%.â
And with the decrease in recent weeks, youâve got a big opportunity in front of you right now. It may be enough for you to want to jump back in.
The Relationship Between Rates and DemandÂ
If you wait for mortgage rates to drop further, you might find yourself dealing with more competition as other buyers re-ignite their home searches too.
In the housing market, thereâs generally a relationship between mortgage rates and buyer demand. Typically, the higher rates are, the lower buyer demand is. But when rates start to come down, things change. Buyers who were on the fence over higher rates will resume their searches. Hereâs what that means for you. As a recent article from Bankrate says:
âIf youâre ready to buy, now might be the time to strike. Home prices have been rising primarily because of a longstanding shortage of homes for sale. Thatâs unlikely to change, and if mortgage rates do fall below 6%, itâs possible buyers would enter the market en masse, further pushing up prices and resurrecting bidding wars.â
Bottom Line
If youâve been waiting to make your move, the recent downward trend in mortgage rates may be enough to get you off the sidelines. Rates have hit their lowest point in months, and that gives you the opportunity to jump back in before all the other buyers do too.