Home News Mortgage rates in largest weekly fall in nearly 40 YEARS as inflation softens

Mortgage rates in largest weekly fall in nearly 40 YEARS as inflation softens

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Homebuyers are saving $100 each month after mortgage rates hit their biggest weekly drop since 1981.

30-year fixed rate falls to 6.6% on softening inflationA week ago the interest rate was over 7%, while 12 months ago the 30 year fixed interest rate was 3.1%.

according to redfin, This drop will save new homebuyers $100 a week. The average U.S. mortgage payment has dropped from $2,542 to $2,430, according to real estate firms.

The Federal Reserve is trying to contain the hottest inflation in decades by making it harder to borrow and cutting spending.

Some big inflation indicators point to a bit lower prices, but other economic indicators point to consumer resilience, as does the job market.

The 30-year fixed rate dropped to 6.6% as inflation eased, saving the average family $100 a month.

Experts warn house prices will continue to fluctuate over the next 12 months

Experts warn house prices will continue to fluctuate over the next 12 months

Taylor Ma, the company’s deputy chief economist, said in a press release: The same house would have cost more if they had signed the deal a week earlier.

“More casual buyers may want to wait a few more months, as there is reason to be cautiously optimistic that the worst of inflation and high interest rates are past and monthly payments could be even lower. is.”

Realtor.com’s manager of economic research, George Latiou, agrees. Financial: “Some buyers may want to wait to see if rates drop further.”

“However, the mortgage market is emerging from crisis as inflation remains above 7% and the Federal Reserve (Fed) pledges to continue raising interest rates over the next few months. No. Rates could bounce back above 7% by the end of the year.”

The 15-year fixed rate also fell from 6.3% to 5.9%. At this time last year, it was 2.3%.

Despite the decline, Nadia Evangelou, senior economist at the National Association of Realtors, told Money Wise: By contrast, her nearly one in three renters could afford the median home a year ago when interest rates were near her 3%.

“So about 7.9 million renters can no longer afford a typical home, while the percentage of first-time homebuyers hit a record low,” said Evangelou.

Mortgage prices remain unpredictable through the end of 2022, and home prices remain high nationwide, according to multiple reports.

Existing home sales (above) fell 5.9% from September to a seasonally adjusted annualized rate of 4.43 million units last month, the National Association of Realtors said Friday.

Existing home sales (above) fell 5.9% from September to a seasonally adjusted annualized rate of 4.43 million units last month, the National Association of Realtors said Friday.

Despite the sharp slowdown in transactions, the national median home price climbed 6.6% in October from a year earlier to $379,100. Prices increased in all four regions

Despite the sharp slowdown in transactions, the national median home price climbed 6.6% in October from a year earlier to $379,100. Prices increased in all four regions

Central bank strategies risk pushing the economy into recession if they put the brakes on economic growth too much.

Data released Thursday showed housing starts fell by more than 4% to 1.4 million units.

Just a day ago, data from the National Association of Home Builders showed that confidence in the single-family home market was at its lowest level in 12 months. The group said it was the first time in 11 months that trust had fallen consistently.

NAHB President Jerry Conter said in a statement posted on the website:

“With the housing sector in recession, the Biden administration and new Congress must shift focus to policies that bring down construction costs and allow domestic home builders to produce more homes,” Conter said. not.”

According to Wells Fargo, about 37% of homebuilders have lowered prices and 59% of homebuilders are using other methods to incentivize new homebuyers.

Coinciding with the new interest rate cuts, mortgage applications increased 2.7% from last week and home purchase applications increased 4%.

Palm Beach-based broker Kevin Kent further explained the impact of lower mortgage rates.

He said WPBF: “It can make a big difference. A 1% adjustment generally affects about $100,000 of what people can buy at the same budget level, same payment level. There is, I’ll tell you, it’s a point of view.

“When I started in real estate, interest rates were 14% to 17%. And people were still buying and selling houses. The drop will help a lot of dissatisfied buyers.”

To put it another way, a homebuyer with a monthly budget of $2,500 could buy a home for $380,750 at today’s 6.6% interest rate, giving him $12,000 more purchasing power than he did a week ago. I can do it.

That same buyer could have bought a house for $368,750 at the 7% rate last week.

Last month, the inventory of homes on the market fell for the third month in a row, leaving home hunters with fewer properties to choose from.

About 1.22 million homes were on the market by the end of October, according to the NAR, or 3.3 months at the current monthly sales pace.

“Inventory levels are still tight, so some homes for sale are getting multiple offers,” Yun said.

“In October, 24% of homes received above their asking price. Conversely, homes that have been on the market for more than 120 days saw an average price decline of 15.8%,” said the economist.

64% of homes sold in October 2022 were less than a month on the market.

First-time buyers accounted for 28% of purchases, down from 29% in September and a year ago. All-cash sales accounted for 26% of transactions, up from 24% a year ago.

The report followed Thursday’s news that single-family home construction and future building permits fell to their lowest level since May 2020.

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