The 30-year fixed rate slipped slightly again last week, prompting some pent-up buyers to lock in a purchase, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 6.13%, down from 6.15% the week prior.
A year ago at this time, the 30-year FRM averaged 3.55%.
The 15-year fixed-rate mortgage fell from 5.28% to 5.17%. A year ago, it averaged 2.80%.
“Mortgage rates continue to tick down and, as a result, home purchase demand is thawing from the months-long freeze that gripped the housing market,” said Sam Khater, Freddie Mac’s chief economist. “Potential homebuyers remain sensitive to changes in mortgage rates, but ample demand remains, fueled by first-time homebuyers.”
Pending home sales have been rising since December, and only fell 26% YOY during the four weeks ending January 22, the smallest drop in more than three months.
Nervous sellers are now open to negotiations after years of having the upper hand. Rate buydowns are having a moment as sellers and buyers figure out a path forward in a high-rate, high-appreciation environment.
“Sellers don’t want their houses to sit on the market,” Bud Kawa, a Detroit-based realtor at Brick and Stone Real Estate, told USA Today. “They are willing to help out buyers more than they were in the last year.”
Rocket Mortgage CEO Jay Farner told CNN that the market is more balanced than before– not exactly a seller’s market, but not a buyer’s market either.
“I’d say it’s an even market. A few years ago, it was clearly a seller’s market. We were doing verified approvals, people were getting a full underwrite within 24 hours to ensure they could present almost like a cash buyer to make an offer on that home,” he said.
“Now, they have a bit more time. They have more homes they can look at…. We’re not seeing 15 offers on one home.”
How far rates will fall remains to be seen, however. Orphe Divounguy, senior macroeconomist at Zillow Home Loans, noted that recession fears have receded in the face of recent economic news. That could put a cap on rate movement.
“[W]hile the Federal Reserve appears set to slow rate hikes, lower risk of recession limits how far interest rates are likely to fall,” he said.
“[T]he outlook for rates remains cloudy. Indeed, data released this week from the Conference Board and the S&P Global Flash US PMI Composite Output Index suggest that a recession is still very much a possibility… More evidence of weakness in leading economic indicators would help to resume the downward pressure on mortgage rates.”
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