Rate Dropping
Welcome back to LUXE BLOG. Fortunately, rates continue to get lower. According to Freddie Mac and Mortgage News Daily, as of July 12, 30-year mortgage rates have dipped below 7%. The change has the potential to boost home buying and selling activities. This will have even more of an impact if the Federal Reserve follows through with expected rate cuts. Today we go over some of the latest stats.
Current Rate Trends
The drop in interest rates is notable because:
- Freddie Mac is a major capital provider for housing lenders.
- Mortgage News Daily monitors housing finance trends.
If the Federal Reserve reduces its key rate in September, as anticipated, mortgage rates could drop to around 6% or even lower.
Why Lower Rates Matter
Lower rates mean more affordable monthly payments on principal and interest. Here’s a comparison:
- In October, with an 8% rate, a $300,000 loan required a $2,207 monthly payment.
- Rates fell below 7% in January, lowering the monthly payment to $1,918.
- When rates increased to 7.5% in April, the payment rose to $2,102.
This fluctuation influences buying decisions, evident in the recent data on existing-home sales.
Also Read: The Ongoing Seller’s Market: Rising Prices & Waning Affordability
As Of July 12, 30-Year Mortgage Rates Have Dipped Below 7%
Home Sales Data
The National Association of Realtors reported a 4.11-million-unit sales pace for existing homes in June, slightly down from May and 2.8% lower than June 2023. Notably:
- Sales are 40% below 2021 levels.
- New-home sales are similarly down 40% from 2021 levels.
Potential Home-Buying Surge
At a 6.8% rate, the monthly payment is about $1,960, an 11.1% decrease from October 2023. Housing experts predict a surge in home-buying if rates fall below 6%, which would reduce the monthly payment to under $1,800. To estimate payments, use calculators on sites like Zillow, Rocket Mortgage, and Bankrate. Mortgages are accessible through banks, savings institutions, credit unions, and mortgage companies.
Market Challenges
Existing-home sales have been sluggish due to high prices and mortgage rates. Additionally, sellers who locked in lower rates are hesitant to sell, knowing their housing costs could increase. In summary, the drop in mortgage rates presents an opportunity. And it could revitalize the housing market. Stay tuned to LUXE BLOG for more updates. And thank you for reading.
Also Read: Zero Down Payment Loans Are Making A Return To The Market