Home News As mortgage rates dip below 7%, ‘millennials should jump at a 6% mortgage like bears grabbing for honey’

As mortgage rates dip below 7%, ‘millennials should jump at a 6% mortgage like bears grabbing for honey’

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Mortgage rates fell slightly below 7% after a better-than-expected economic report. inflation was easingOne financial expert says the drop is an opportunity prospective homebuyers shouldn’t miss.

“Millennials should pounce on 6% mortgages like bears grabbing honey,” Bill Smead, founder and chairman of Smead Capital Managment, told MarketWatch.

“10-year government bond spread

Interest rates and 30-year mortgage rates have reached ridiculously high levels. A 3% spread is unusual,” he added Smead.

There are 50 million people between the ages of 28 and 38 in the United States, some of whom are likely to be potential homeowners, he said. Mortgage Bankers AssociationAccording to the MBA, only 39% of people under 35 own a home, and 61% of those between the ages of 35 and 44 own a home.

The cost of living in the US is finally showing signs of slowing down, some say. November report, annual price increases for consumer goods and services slowed from 8.2% in September to 7.7% in October. Responding to inflation data, mortgage rates fell from 7.22% on Nov. 9 to 6.62% on Nov. 10. Mortgage News Daily.

Homebuilder stocks are suffering from a sharp rise in mortgage rates, said Smead.

Many homebuilders have expressed lack of confidence given declining buyer traffic. Builder confidence dropped in October for the 10th straight month, The National Association of Home Builders reportedand buyer traffic plummeted to its lowest level in a decade, except when the pandemic began.

An analyst told MarketWatch earlier this month: had withdrawn from the contract Buy new homes from builders at much higher rates than before.

“Whether people care what the Fed does or not, compared to the rest of the Fed’s set rates, the shock peak for mortgage rates was about a month ago,” Smead said. “The stocks of these homebuilders have had a deep pessimism. did.”

Smead added that macro trends point to a solid runway for builders and sellers.

“We know there is a huge pool of homebuyers. I know you are,” he said. “If these mortgage rates return to historical levels relative to 10-year Treasuries, these dynamics will accelerate.”

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