If you’ve been holding off on buying or selling to make a move because you felt mortgage rates were too high, their recent downward trend is exciting news for you. Mortgage rates have descended since last October when they hit 7.79%. In fact, they’ve been below 7% for over a month now (see graph below):
And while they’re not going back to the 3% we saw during the ‘unicorn’ years, they are expected to continue to go down from where they are now in the near future. As Dean Baker, Senior Economist at the Center for Economic Research, explains:
“It also appears that mortgage rates are now falling again. They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.”
Here are two reasons why this recent trend, and the expectation it’ll continue, is such good news for you.
Sellers: You May Not Feel as Locked-In to Your Current Rate
With mortgage rates already significantly lower than they were just a few months ago, you may feel less locked-in to the current mortgage rate you have on your house. When mortgage rates were higher, moving to a new home meant possibly trading in a low rate for one up near 8%.
“We might be at peak “lock-in effect.” Some move-up or lifestyle sellers might be coming to terms with the fact 3% and 4% mortgage rates aren’t returning anytime soon.”
Buyers: The Supply of Homes for Sale May Grow
As rates ease, activity in the housing market should pick up because more sellers who had been holding off will jump back into action. If more sellers list, the supply of homes for sale will grow – a welcomed trend we’ve already started to see this year.
According to data from Bright MLS, the top reason buyers and sellers (who want to buy a replacement home) have been waiting to take action is high mortgage rates.
(see graph below):
Lower mortgage rates mean sellers won't feel locked-in to their current rate and buyers can potentially save money on their home loans, making the prospect of purchasing a home more attractive and affordable. Now that rates are easing, more buyers and sellers are likely to feel they’re ready to jump back into the market and make their move.
If you’ve been waiting to buy or sell because you didn’t want to take on a larger mortgage rate or you thought buyers weren’t out there, the recent decline in mortgage rates may be your sign it’s time to make your move. Let's connect when you're ready! Contact Sam Fakih at COMPASS (858) 255-1010
Sam Fakih, REALTOR
DRE: 01434767
COMPASS
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