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THE GARDEN ISLAND
Friday, April 12, 2024 • B3
To wait or not to wait for lower mortgage rates Alex Veiga AP BUSINESS WRITER LOS ANGELES — Shop for a home now or hold out for the possibility of lower mortgage rates? That question is confronting many home shoppers this spring homebuying season. Lower rates give home shoppers more financial breathing room, so holding out for a more attractive rate can make a big difference, especially for firsttime homebuyers who often struggle to find an affordable home. However, there’s a potential downside to waiting. Lower rates can attract more prospective homebuyers, heating up the market and driving up prices. Acting now would likely saddle a buyer with a rate of around 6.9 percent on a 30-year mortgage. In late October, the rate surged to a 23-year high of nearly 8 percent, according to mortgage buyer Freddie Mac. Economists generally expect the average rate on a 30-year mortgage to decline later in the year. “If mortgage rates do in fact drop as expected, I would expect there to be more competition from increased demand, so that’s one reason to potentially act now,” said Danielle Hale, chief economist at Realtor.com. “And then those buyers, if mortgage rates do fall, would presumably have an opportunity to refinance.”
as well as other factors can influence mortgage rates. Current indications are mortgage rates will remain higher for a while longer. For now, the uncertainty in the trajectory of mortgage rates is working in favor of home shoppers like Shelby Rogozhnikov and her husband, Anton. The couple owns a townhome in Dallas and want more space now that they’re planning on having their first child. They’re looking for a house with at least three bedrooms that’s priced within their budget of around $300,000. They’re not feeling any urgency, but they are eager to avoid a surge in competiDAVID ZALUBOWSKI / ASSOCIATED PRESS FILE tion should mortgage rates decline in the coming A new home under construction is seen in southeast Denver on Aug. 21, 2023. months. “I know interest rates will The rock-bottom mortfin found that the typical erage of 6.82 percent works go down eventually, but I U.S. household earns about out to about $215 more a gage rates that fueled a $30,000 less than the month than if the rate was feel like when they go down buying frenzy in 2021 and housing prices might go $113,520 a year it needs to at 6 percent, for example. early 2022 are long gone. back up again,” said Shelby While an average rate on a afford a median-priced U.S. Monthly payments on the Rogozhnikov, 38. a dental home, which the company same loan two years ago, 30-year home loan of just estimated was $412,778 in when the mortgage rate av- hygienist. “I have the mortunder 7 percent is not far from the historical average, February. Redfin defines a eraged 4.72 percent, would gage rate thing to worry home as affordable if the that’s little consolation to be $534 less. about and my biological buyer spends no more than homebuyers who, prior to Many economists expect clock, which has less time 30 percent of their income that mortgage rates will the last couple of years, on it than the mortgage on their monthly housing hadn’t seen average rates ease this year, but not berates, so it’s now or never.” this high going back nearly payment. The analysis fac- fore inflation has cooled Real estate agents from two decades. tored in a 15 percent down enough for the Federal Re- Los Angeles to New York Combined with a nearly payment and the average serve to begin lowering its say bidding wars are still 44 percent increase in the happening, though not as rate on a 30-year loan in short-term interest rate. national median sale price February, which was The Fed has indicated it often as in recent years in of previously occupied some places. around 6.8 percent. expects to cut rates this homes between 2019 and “Overall, the bidding Lower mortgage rates year once it sees more evi2023, elevated mortgage would boost homebuyers’ dence that inflation is slow- wars are not nearly as exrates have made buying a purchasing power. Financing from its current level treme as they were in marhome less affordable for ing a $400,000 home with a above 3 percent. How the kets’ past,” said Tony many Americans. bond market reacts to the 30-year mortgage with a Spratt, an agent with CenA recent analysis by Red- fixed rate at last week’s av- Fed’s interest rate policy, tury 21 Real Estate Judge
Average long-term mortgage rate edges closer to 7 percent Alex Veiga AP BUSINESS WRITER LOS ANGELES — The average long-term U.S. mortgage rate rose to its highest level in five weeks, a setback for prospective homebuyers during what’s traditionally the busiest time of the year for home sales. The average rate on a 30-year mortgage rose to 6.88 percent from 6.82 percent last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.27 percent. When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford at a time when the U.S. housing market remains constrained by relatively few homes for sale and rising home prices. Rates have been mostly drifting higher in recent weeks as stronger-than-expected reports on employment and inflation have stoked doubt among bond investors over how soon the Federal Reserve will move to lower its benchmark interest rate. The central bank has signaled that it expects to cut its short-term rate three times this year once it sees more evidence of cooling inflation. On Wednesday, Treasury yields jumped in the bond market following a report showing that inflation was hotter last month than economists expected. The March consumer prices report was the third straight showing inflation readings well above the Fed’s 2 percent target. A report on Thursday showed inflation at the wholesale level was a touch lower last month than economists expected. The yield on the 10-year Treasury, which lenders use as a guide to pricing loans, jumped to 4.57 percent on Thursday afternoon, it’s highest level since November 2023. How the bond market reacts to the Fed’s interest rate policy, the moves in the 10-year Treasury yield, as well as other factors can influence mortgage rates.
Fite Co., in the Dallas-Fort Worth area. Home shoppers also have more properties to choose from this spring than a year ago. Active listings — a tally that encompasses all the homes on the market but excludes those pending a finalized sale — have exceeded prior-year levels for five straight months, according to Realtor.com. They jumped nearly 24 percent in March from a year earlier, though they were down nearly 38 percent compared to March 2019. The still-relatively tight inventory is helping give sellers the edge in many markets around the country, but not all. In Raleigh, North Carolina, home listings are taking longer to sell, and that’s made sellers more flexible on price or with helping cover repair costs, said Jordan Hammond, a Redfin agent. “Before we saw sellers could really do what they wanted,” she said. “They didn’t have to contribute at all to the buyer’s purchase. And now that’s kind of flipped. I’m seeing more buyers pushing sellers.” Still, the thin inventory of properties on the market means home shoppers who can find a property for sale in their price range may want to put in an offer rather than wait, because there’s no guarantee a better option will come along right away.