Mortgage rates fell for the third week in a row, helping to revive consumer interest.
The average 30-year mortgage rate fell to 6.15% from 6.33% a week earlier, according to Freddie Mac. Rates have fallen by more than three-quarters of a point since mid-November, as signs that inflation is finally cooling boost the chances that the Federal Reserve will slow its rate hikes. strong this year.
Lower prices are a boon to home buyers, especially first-time buyers, who are finally seeing market conditions in their favor when four housing prices and rising consumer prices. For a small number of homeowners, the downturn also offered some refinancing opportunities.
“Sellers are negotiating price reductions, asking buyers to pay all closing costs, or lower their prices,” John Downs, a senior vice president at Mortgage Vellum, told Yahoo Finance. “A lot of the activity seems to be at the bottom — with those first-time buyers.”
Coming off the peak of infections, consumer activity has eased since its freeze in December.
The number of mortgage applications for home purchases rose 25% on a seasonally adjusted basis for the week ending January 13 from the previous week, according to Mortgage Bankers Association (MBA). However, the activity remains at 35% from last year.
“Home buyers who were pre-approved before buying are starting to re-enter the housing market,” Jeffrey Ruben, president of WSFS mortgagetold Yahoo Finance.
In addition to falling prices, customers in the market are getting better prices and other concessions.
The share of housing with reduced prices rose to 13.6% in December, from 7.1% a year ago, Realtor.com data found. At least 42% of homes sold in the fourth quarter of 2022 also included a retail salessuch as cash for closing costs and repairs, sales, and home insurance.
At the top, the price of houses in the month of December was $400,000Realtor.com data showed, about 11.1% lower than the June high of $449,000.
“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,” said MBA Chief Economist Mike Fratantoni in a statement.
One of the remaining challenges is getting buyers back into the market. Those buyers may not want to sell their current home and leave their “low price” from the recession-period now, according to Downs, especially the average price.
“The biggest problem we’re seeing is from customers moving up the chain,” Downs said. “Some homeowners are still not moving because their current rents are too low, because their rates are lower than last year, and there is no rent available at all. it is expected.”
Demand for refinancing has picked up, but remains low
As rates decline, a small, but growing, pool of homeowners will finally have the opportunity to refinance.
At last week’s rate of 6.33%, 760,000 homeowners could shave three-quarters of the credit off their current mortgage with a refinance, 81% more than in November. when compared to 7%, according to the mortgage technology and information provider Black Knight Inc.
That prompted some reinvestment activities, with the number of applications rising 34% last week compared to the first, MBA received. However, that large increase in activity is from a low level, with the number of refinancing requests 81% lower than the year before, a fact that was shown on the ground, approximately ate with Reuben.
“We haven’t seen any growth in refinancing in the market so far,” he said.
Gabriella is a personal finance writer at Yahoo Finance. Follow him on Twitter @__gabriellacruz.
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