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According to the National Association of Realtors' 2024 Member Profile, about 20% of real estate professionals say many potential homebuyers are waiting for mortgage rates to fall before making a move, which real estate agents say is one of the biggest factors limiting real estate transactions recently. But the ultra-low interest rates of the past, like 2% or 3% during the pandemic, are now even more of a thing of the past. Economists say buyers should stop waiting because those rates are unlikely to come back anytime soon.
Federal Reserve Chairman Jerome Powell said Tuesday that the central bank remains committed to keeping interest rates high until inflation returns to 2%, which he believes will lead to a broader economic recovery. (As of this week, the Consumer Price Index was at 3%.) Still, Powell acknowledged that “higher interest rates are no doubt making homebuying more difficult in the near term.” [but] The best thing we can do for the housing market and the economy is to bring inflation down sustainably.”
Freddie Mac reports that 30-year fixed-rate mortgages have hovered near 7% in recent weeks, averaging 6.89% this week. Five years ago, rates were in the 3% range.
Rates won't average the ultra-low levels they have in the past 10 to 15 years. “There will be ripple effects for anyone thinking about mortgage rates, but buyers waiting for mortgage rates to get back to historic lows are probably going to be waiting a very long time,” said Jessica Lautz, deputy chief economist at the National Association of Realtors.
At this week's 6.89% average, a homebuyer who buys a $400,000 home with 20% down would likely have a monthly mortgage payment of $2,105. By comparison, someone who puts 10% down would have a monthly payment of $2,369, Lautz said.
Freddie Mac reported the following national average mortgage rates for the week ending July 11:
30-year fixed rate mortgages: Average 6.89%, down from last week's average of 6.95%. A year ago, the 30-year rate averaged 6.96%. 15-year fixed rate mortgages: Average 6.17%, down from last week's average of 6.25%. At the same time last year, the average rate was 6.30%.
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