Despite a seemingly endless upward trajectory, recent data finally points to falling mortgage rates. Mortgage rates, on a consistent rise over the past year, fell to 6.61%. Thus, mortgage rates decreased nearly half a percentage point since last week.
Furthermore, 15-year mortgage rates dropped to 5.98%, nearly half a point drop but still way higher than the 2.39% of one year ago. These rate drops come at a tumultuous time as the Federal Reserve stated that rate increases will most likely be coming in the next few months. However, the most recent data offers a beacon of hope to potential homebuyers.
How Do Falling Mortgage Rates Affect Potential Homebuyers?
For anyone interested in buying a home in the near future, interest rates probably pose the biggest hurdle. Although falling mortgage rates offer new opportunities, should people start getting excited for a small drop like this? Will it continue to trend downward?
Experts say that, even with slightly lower interest rates, the market may not see an influx of homebuyers. That said, high interest rates slowed home purchasing, correlating with declining home prices.
Experts predict that, in order to see a relaxed buying market where more people begin looking to purchase again, we’d need to see more sustained interest rate drops before the market becomes friendly again for buyers.
The Future of Mortgage Rates
As with the buying market, prospective homebuyers need to stay patient. Also, soon-to-be homeowners can benefit from watching for trends rather than jumping on small dips and drops. As it stands, mortgage rates could still rise back up due to future inflation, Fed hikes, or unknown future world events. However, experts predict rates to settle at lower rates in the near future.
Nicole Rueth told NextAdvisor that she believes it would “take a lot to push rates back up to 7%.” In addition, Rueth expects rates to settle around 5.5% next year and that they could remain in that area for the near future.
Should You Buy a Home Amidst Falling Mortgage Rates?
For homebuyers, it can be tough to juggle future potential drops with the dips we’re seeing now, but experts encourage potential buyers to always consider your own budget first. Depending on what monthly payments you can afford, consider if these rate dips bring you into a comfortable purchasing zone because, due to lack of demand from these high rates, prices of homes are fairly low and competition is limited so you can avoid possible bidding wars on homes that we saw earlier in the pandemic.
But, it really is a case by case basis based on budgets, timings, and available homes in your budget. Conclusively, real estate experts advise patience to homebuyers and not to “over-extend” their budget to jump on a dip and to continue monitoring the situation.
For questions on the Chicago real estate market, reach out to the title and escrow specialists at Plymouth Title Guaranty Corporation!