Mortgage rates close to 6% show more homebuyers, and even lower rates could go higher – but investors warn buyers ‘invincible’

Mortgage rates close to 6% show more homebuyers, and even lower rates could go higher – but investors warn buyers ‘invincible’

Refusing to let a good opportunity pass them by, a wave of home buyers pulled the trigger this week as mortgage foreclosures edged closer and closer. at the 6% mark.

“Prices are below their lowest level since September of last year, boosting homebuyer demand and building sentiment,” written Sam Khater, chief economist at mortgage giant Freddie Mac.

At the same time, analysts have warned that consumers who have not reached their action, need to look at the changes in this unstable economy, because the mortgage is far from the same thing. it affects the capacity.

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30 year fixed rate mortgage

The average 30-year fixed rate it fell again to 6.15% this week, compared to last week’s 6.33%. Last year at this time, the average rate was 3.56%.

“With the Fed tightening its monetary policy, the US housing market is under significant pressure. Although our 2023 forecast expects continued inflation prices that cause pressure on rates, recent data has helped lower mortgage rates,” said trader Jiayi Xu.

“As the economy faces deflation, mortgage rates may continue to fluctuate in the short term, within the 6%-7% range. we saw it five months ago.”

In fact, Xu pointed out, mortgage rates remain relatively high compared to last year, creating a “financial barrier” for many. the customers.

15 year fixed rate mortgage

The rate at a 15 year home loan fell from 5.52% down to 5.28% this week. This time last year, the 15-year fixed-rate was 2.79%.

Nadia Evangelou, senior economist for the National Association of Realtors, believes prices may fall further.

“The drop in mortgage rates creates opportunities for many buyers,” Evangelou said.

“The lower the mortgage, the lower the monthly payment. Since prices peaked recently in mid-November, customers can save about $300 every month with prices close to 6%.

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Mixed economic data reassures analysts

The latest government statistics are shown value of money slipped from 7.1% in November to 6.5% in December. At the same time, US retail sales for December showed the largest drop in 12 months, indicating weakening consumer demand.

Deposits are near record lows and consumers are increasingly relying on their credit cards, putting home ownership out of reach for most Americans.

“While the slowdown in December inflation is a positive sign, concerns from businesses and investors about economic growth continue to rise due to weak consumer sales data. it reminds us that the US consumer cannot be defeated,” Xu wrote.

Xu noted that although “unemployment nationwide remained at low levels for a long time” in December, the technology industry in particular reported. thousands of healings.

Increased mortgage applications

Demand for mortgages jumped 27.9% from last week, according to the Mortgage Bankers Association (MBA).

“Mortgage application activity rebounded throughout the first week of January, with refinancing and sales increasing by double-digit percentages compared to the previous week, which included the New Year’s holiday. ,” said Mike Fratantoni, senior vice president and chief economist at MBA.

“As we enter the early spring buying season, lower mortgage rates and more homes on the market will help support the potential for first-time home buyers.”

Refinancing activity also increased by 34%, although it was 81% lower compared to the same period last year.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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