Last week, the average 30-year, fixed-rate loan dropped to 4.51%, according to Freddie Mac. This is down from 4.58% the week before, the highest rate since July 2011. Although these rates have only slightly dipped, if this trend continues we’re likely to see more buyers in the market.
This is not the only rate to drop though, the average 15-year, fixed mortgage rate also declined last week, moving down to 3.45%. Mortgage rates in western states declined too, the average 30-year moving down from 4.57% to 4.49%.
While mortgage rates remain historically low, the recent spike has been impacting the market. Paired with increasing home prices, the recent increases in mortgage rates have been making affordability lower, knocking some potential buyers out of the market.
As a result, there was a reduction of 13.4% new homes purchased in July, a seasonally adjusted annual rate of 394,000. This is the second straight month that home sales have declined, and while this is the lowest level we’ve seen in nine months, the market is still growing. Currently, home sales are close to their 6½-year high reached earlier this May.
Though the recent reduction in mortgage rates was minor, it could still be enough to encourage buyers to enter the market. Many potential buyers missed their chance to secure the low post-crisis mortgage rates of the past couple years, and with the market recovering, rates are only going to get higher. If rates descend any further, it is likely we will see many of these buyers enter the market to take advantage of what might be the lowest rates we’ll see for a while.
Has your business been impacted by increasing mortgage rates? Do you think this drop will encourage more people to buy? What are your thoughts?
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