The Housing market is starting to see some movement, with mortgage interest rates going down from 6.94% to 6.88%. Announcement by the Fed that it would cut rates soon is bringing hope for renewed economic activity, including
High mortgage rates make home values rise, as the cost to finance goes up. Conversely, it gets harder to sell homes when mortgage rates are high, which makes their prices drop. This change could give people the opportunity to relocate or downsize. Fox Business says:
Mortgage rates fell slightly this week after climbing for a month straight, sparking an increase in purchase applications in a housing market that has largely been stalled for months amid sky-high home prices and persistently elevated rates.
Freddie Mac’s latest Primary Mortgage Market Survey released Thursday showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.88% this week, down from 6.94% last week. The average rate on a 30-year loan was 6.73% a year ago.
Homes in the mid-market rates saw the greatest volume change, with 25% more homes valued between 200 and 350k. This generally covers starting homes for families not located in the major coastal cities. CNBC continues:
“Of note, purchase volume – particularly for FHA loans – was up strongly, again showing how sensitive the first-time homebuyer segment is to relatively small changes in the direction of rates,” said Mike Fratantoni, senior vice president and chief economist at the MBA. “Other sources of housing data are showing increases in new listings, which is a real positive for the spring buying season given the lack of for-sale inventory.”
There were 14.8% more homes actively for sale in February compared with the same time last year, according to Realtor.com. Notably, homes priced in the $200,000 to $350,000 range grew by 25% from a year ago, outpacing all other price categories.
The biggest risk for lowered rates remains another housing collapse like in 2008. However, low access to housing also hurts Americans’ prosperity. Federal mortgage lenders will have to weave a delicate path in this changing rate.
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