Mortgage rates didn’t drop much this week, providing no relief to buyers. (iStock)
Prospective homebuyers didn’t get much mortgage rate relief this week, as the average 30-year fixed-rate loan barely budged from 6.87% to 6.86%, Freddie Mac reported.
Last year, interest rates were not much different and averaged 6.71% for 30-year mortgages and 6.06% for 15-year mortgages.
“30-year fixed-rate mortgages continue to decline, hitting the lowest level in almost three months,” said Sam Khater, Freddie Mac Chief Economist.
“By historical standards, the economy is in good shape and we expect rates to continue to decline over the summer months, bringing additional buyers into the market,” Khater said.
Interest rates on 15-year mortgages fell this week, averaging 6.16%. Last week, average rates were slightly lower at 6.13%.
Prospective buyers who want to see what loan terms and rates would work for them can take advantage of Credible’s free online tools.
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Most Americans remain pessimistic about home prices
High home prices have left buyers scrambling to buy, and many don’t expect the market to improve anytime soon. Only 21% of Americans think now is the right time to buy a home, a Gallup poll found.
Almost 68% of adults also expect home prices in their area to rise in the next year, one of the highest readings in the poll’s history. A year ago, only 56% said the same, indicating that Americans are very aware of the current state of the market.
Most potential buyers wait for mortgage rates to drop before selling or buying. Considering that the Federal Reserve has decided to keep interest rates where they are, mortgage rates are not likely to fall in the near future.
“Although mortgage rates continue to trend lower, the declines have not yet been large enough to have an impact on most housing metrics,” explained Realtor.com Chief Economist Danielle Hale.
The good news is that rates are not expected to rise again, given the current economy and housing market.
“For home buyers and sellers, peak mortgage rates are likely behind us, but the risk of volatility remains, complicating moving decisions,” said Realtor.com economist Jiayi Xu. “Furthermore, with only one rate cut expected before the end of 2024, relief may come too little too late for many first-time homebuyers.”
If you think you’re ready to shop for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders in minutes.
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Inventory is not the problem, housing affordability is
Summer is a common time for sellers to list their homes, and this summer is no different. Listings are up 14.9% since May, Redfin reported. In May alone, there were about 1.75 million homes listed for sale, and 658,024 of those were newly listed.
There are many listings to choose from in many parts of the country, but the price tag associated with those listings is keeping buyers away.
Affordability has decreased significantly as incomes struggle to keep up with the cost of housing. The preliminary housing affordability index from the National Association of Realtors (NAR) has dropped to 95.9. A score above 100 signals that middle-class families have enough income to buy a median-priced home in their area.
Unfortunately, economists don’t believe the housing market will rebound until at least 2026, according to a Bank of America release. The company’s economists explained that the housing market is currently “stuck” in an unaffordable place for many Americans.
The market is not likely to “unlock” until 2026 or later. Plus, prices are expected to remain high and have the potential to become even more expensive.
Before buying a home, first check mortgage rates with an online marketplace like Credible.
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