Long-term mortgage rates have declined for the third consecutive week, falling slightly below 7%. This marks the first time since mid-April that the average rate on a 30-year mortgage has dropped below 7%, providing a modest relief for prospective homebuyers and investors who have been dealing with high mortgage rates, surging property prices and limited inventory in the housing market.
Mortgage Rates Slip to 6.94% – Is There Hope for the Spring Buying Season?
As reported by Freddie Mac on May 23rd, the rate decreased to 6.94% from the previous week’s 7.02%. This time last year, the rate was 6.57% on average. Recent rate decreases come after a five-week period of rises that drove the average rate to its peak since November 30th. The rate hikes were a huge financial burden, as elevated mortgage rates can significantly increase monthly costs for borrowers and, as a result, reduce their home-buying options.
In October, rates reached a 23-year high of 7.79%, but the average rate for a 30-year mortgage had stayed below 7% this year until last month. Despite this recent drop, the rate is still significantly higher than it was two years ago when it stood at 5.25%. The rise in rates last month has been particularly discouraging for potential homebuyers, especially since this is generally the busiest period for home sales – the spring buying season. Typically, over a third of annual home purchases occur between March and June.
Sales of pre-owned homes in the U.S. declined during March and April as prospective buyers faced increased mortgage rates and home prices. However, a recent decline in mortgage rates has led to a small resurgence in mortgage applications, which saw a 1.9% increase last week compared to the previous week, according to data from the Mortgage Bankers Association. There may appear to be some hope for the spring buying season to pick up with lower rates now available. However, there is still a housing shortage as well as an affordability issue to deal with.
Could Future Fed Interest Rate Cuts Lead to Decreased Mortgage Rates?
Mortgage rates fluctuate up and down based on a variety of factors. This may include the bond market’s response to the Fed’s rate decisions and fluctuations in the 10-year Treasury yield, which lenders commonly use to benchmark the pricing of home loans. Recently, Treasury yields have declined after Federal Reserve Chair Jerome Powell indicated that the central bank is nearer to reducing its primary interest rate than raising it. Even so, the Fed has consistently stated that it does not intend to lower interest rates until it’s more certain that inflation is steadily diminishing towards its 2% goal. When interest rate cuts are finally made, mortgage rates will most likely lower, and the housing market may see some relief.
Related Article: Feds Leave Interest Rates Unchanged – Three Cuts Projected for 2024
Investors Urged to Lock in This Reduced Mortgage Rate Before It Rises Again
Investors are strongly encouraged to secure the available lower mortgage rates before they inevitably rise. Locking in these rates can lead to significant long-term savings, lower overall mortgage expenses, and increase property investment returns. However, as economic conditions fluctuate, the opportunity to benefit from a lower rate may soon be gone.
For those worried about the housing shortage and whether or not they can actually find an available property, know that Morris Invest has a good supply of new construction rental properties available at this time. In addition to this, many of our clients secure lower-than-industry-standard mortgage rates when they work with Morris Invest.
When it comes to providing clients with a cash flowing property, our team handles every aspect of the deal. Also, we can craft a personalized investment plan based on your individual needs. Investors concerned about financial constraints should know that we have partnerships with over 200 banks, providing opportunities for those who feel they have no options. Also, we can guide you on leveraging your retirement accounts, such as your 401(k), which can be used to purchase an investment property.
Related Post: Reasons Why the 401(k) is a Bad Investment Vehicle to Retire On
Feel free to schedule a free 30-minute call if you have any questions about mortgage rates, investment properties, or other inquiries – we look forward to speaking with you.
Take a moment to dive into the following video that touches on inflation which can affect mortgage rates:
