The 30-year fixed-rate mortgage increased for the third week in a row, with the latest rate reaching 6.44%, up from 6.32% last week, as reported by Freddie Mac. Mortgage rates were expected to ease up in response to the Fed’s jumbo rate cut last month, but they have, instead, continued on an upward climb.
Related Article: Fed’s Drastic Rate Cut Drives Investors to Buy Before Housing Prices Surge
Increasing rates have cast a shadow over buyers’ and sellers’ plans to re-enter the housing market, as well as caused refinance applications to drop, as explained by Joel Kan, MBA’s Vice President and Deputy Chief Economist:
“The recent uptick in rates has put a damper on applications. Refinance applications fell 26 percent to their lowest level since August, with comparable drops in both conventional and government refinances. This pushed the refinance share of applications back below 50 percent for the first time in over a month. Furthermore, purchase applications also decreased but notably remain 7 percent higher than a year ago.”
Current 30-Year Fixed Mortgage Rate as of October 17, 2024
Economic Data Pushing Up Mortgage Rates to Highest Level Since August
Although predictions indicated mortgage rates might drop after the Fed’s cut, experts are aware that these rates are influenced by a variety of economic factors, including trends in jobless claims and retail sales, as well as the Philly Fed Business Outlook Survey, which all recently came in stronger than expected. In reaction to these factors, bond prices dipped and yields rose, and mortgage rates typically follow suit with the yield on 10-year Treasury bonds.
Next Mortgage Rate Reduction Expected to Spark Housing Market Revival and Price Hike
Mortgage rates are expected to eventually trend downward, which will increase buyer interest. However, due to the market’s volatility, analysts are uncertain about the timing of this decrease. When a lower rate hits, pent-up buyers will flood the market to sift through the limited housing presented to them. When it comes to a supply and demand issue such as this, the result is rising home prices.
Related Article: Home Affordability Crisis – Lowest Level in Nearly Two Decades
On top of this, Americans are competing for available homes as millions of migrants pour into our nation’s cities. This is also pushing housing prices up, as stated by J.D. Vance at the last debate:
“We don’t want to blame immigrants for higher housing prices. But we do want to blame Kamala Harris for letting in millions of illegal aliens into this country, which does drive up costs, Tim. Twenty-five million illegal aliens competing with Americans for scarce homes is one of the most significant drivers of home prices in the country. It’s why we have massive increases in home prices that have happened right alongside massive increases in illegal alien, alien populations under Kamala Harris’s leadership.”
Related Article: Is Mass Immigration Shattering the Homeownership Dream for U.S. Citizens?
With limited properties being an overall concern, higher mortgage rates that have been fending off buyers for the time being, have become a window of opportunity for real estate investors seeking out lower-priced available properties.
Demand for Rentals Rising Along with Rental Income
As it stands, with mortgage rates rising, causing homeownership to become financially out of reach, as well as sellers holding on to their properties to lock in their low rates, and inventory at an all-time low, families are being funneled into rental properties.
Related Article: Record High Mortgage Rates for 2024 Drive Up Demand for Rentals
This scenario presents the opportunity for real estate investors to purchase now while buyers are backing off as they wait for mortgage rates to lower. Jumping into the market before rates dip is a smart financial move that enables investors to grab properties before home prices rise, all while the demand for rentals is through the roof with high rental rates.
For investors who don’t feel comfortable with this strategy because locking in a lower mortgage rate is your goal, it’s worth noting that you can always refinance when rates dip. Securing a lower property price should be the priority because that cost can never be adjusted. Additionally, once you own the property, when home prices rise again, you’ll get an instant equity boost.
Invest Now Before the Housing Market is Overwhelmed with Buyers and Prices Skyrocket
Mortgage rates will eventually start trending downward, causing a chain of events that will ultimately reduce a real estate investor’s return on investment. The key to avoiding this is to buy before rates lower and a buying frenzy begins.
Investors who feel they’re unable to make a rental property purchase happen before the next round of market changes can rely on a full-service investment company to make it happen.
Morris Invest specializes in new construction rental properties that are located in lucrative markets in landlord-friendly states, with mortgage rates that are lower than industry-standard. This is possible through negotiated rates with banks we have long-term relationships with, as well as the use of buydown credits, when available. Additionally, our properties are affordable because we purchase in bulk during the construction phase, allowing us to offer them at or below market value.
If you’d like to hear more about our available rental properties, feel free to contact Morris Invest. Our team can come up with a custom plan based on your particular situation, with the end goal of placing a cash flowing rental property in your portfolio. In the meantime, head over to our Morris Invest & SDIRA Program page for details on what we can do to help you on your investment journey.
Before you go, grab a cup of coffee and dive into the following video on the affordable housing crises:
