Lower mortgage rates lure some homebuyers back
The daily average mortgage rate topped 7% a week ago last Wednesday reaching a four-month high. However, the banking crisis that has been unfolding in the United States has helped drive down the interest on home loans. The daily average of 30-year fixed-rate mortgage ended this week at 6.55%, half a point below its peak on 8 March.
“Buyers pounced when rates fell because they’re so volatile right now, which shows that there are plenty of people waiting in the wings for the right time to enter the market,” said Redfin Economics Research Lead Chen Zhao. “Where mortgage rates go from here largely depends on how the Fed reacts to chaos in the banking industry in the U.S. and abroad, alongside stubbornly high inflation.”
While the lower rates are making it cheaper to buy a home and prices are coming down, the average mortgage payment is still almost a quarter more than it was last year. And despite homebuyers rushing to get a lower rate, overall demand in the market remains weak. Pending home sales are down 17% compared to 12 months ago, the biggest drop in six weeks.