Mortgage rates have been steadily climbing for some time, but finally saw a modest dip last week, and if they can stay stable for a bit or drop even lower, it could provide some welcome support to home sales. The average 30 year fixed rate reversed course and dropped half a point to 4.59% for the week ending August 9th, according to Freddie Mac.
Sales have flattened out somewhat recently, after multi-year price increases, ongoing tight inventory, and recent higher rates. If rates continue to climb or spike higher, home price growth may stagnate, since “some prospective buyers are definitely feeling an affordability crunch”, according to Freddie Mac’s chief economist. Right now, a rate of 4.59% is still up significantly from last year at this time, when 30 year rates averaged 3.90%.
Mortgage rates are highly tied to movement in the bond market, which has rallied in the last week based on a currency crisis in Turkey, and uncertainty over the long term effects of US trade tariffs. Most economists expect, however, that unless there’s big change in our economic fundamentals or geopolitical stability, it’s unlikely that rates will move much lower than early 2018 lows. More likely, the best we can hope for is a brief rest from the upward climb, to give buyers a little bit of help with affordability for now, before the inevitable continuation of increases. (We originally wrote about economists’ projections that rates would hit 5% by the end of this year – let’s hope we were wrong and we can hold off a bit longer!) In any case, if you’ve been looking to buy, now may be a good time to take advantage before the next climb.
If you have questions about where rates may be headed, the current state of the housing market, or where your best opportunities lie, contact us today! We’re here for any and all of your Real Estate needs.