Mortgage Rates High Ahead of the Election

Homebuyers watched mortgage rates soar during the Federal Reserve’s two-year rate-hiking campaign to lower inflation. Many hoped for relief when the central bank finally began cutting interest rates in September. Yet mortgage rates have been volatile over the last two months. After initially dropping, they’re now surging back up again. Many factors are contributing to the upward pressure on rates: strong economic data, uncertainty surrounding the presidential election and evolving geopolitical risks.   At its upcoming policy meeting on Nov. 7, the central bank is expected to make another interest rate cut. The Fed’s future rate reductions, combined with cooler inflation and less economic instability, should allow mortgage rates to fall. But the path will be bumpy and long, especially if incoming economic data is positive or even mixed

Whats Going on With Mortgage Rates Right Now?

Mortgage rates began falling a few months ago as worrying economic indicators, like rising unemployment, led investors to believe the Fed would begin cutting rates aggressively. Leading up to the central bank’s Sept. 18 half-percentage-point rate cut, mortgage rates had reached their lowest point in roughly two years. Since then, rates have been slowly inching higher in response to positive news on inflation and, more recently, the labor market.  

Will Mortgage Rates Go Down This Year?

Aside from the day-to-day fluctuations in mortgage rates, a bigger picture shows an easing rate environment. Now that the Fed has pivoted to cutting rates (as opposed to hiking or holding them steady), we can expect mortgage rates to fall gradually over time. “It’ll be a slow process, so don’t expect a big drop right away,” said Matt Vernon head of consumer lending at Bank of America. “Instead, think about whether it makes sense to lock in a lower but not perfect rate now, or wait for rates to fall further over time.” Most housing forecasts still call for the average rate on a 30-year fixed mortgage to move closer to 6% by the end of 2024. But how quickly we get there depends on incoming economic data and the pace of Fed rate cuts. We’re still far from an affordable housing market. “It would take a pretty significant drop in rates to really make a dent in affordability now, which seems unlikely in the near term,” said Alex Thoams, senior research analyst at John Burns Research and Consulting.

Instant Reaction: Mortgage Rates, November 7th 2024

Facts: The average 30-year fixed mortgage rate from Freddie Mac grew to 6.72% from 6.54% last week. At 6.72%, with 20% down, a monthly mortgage payment is $2,069 on a home with a price of $400,000. With 10% down, the typical payment would be $2,328. Positive: Once past the election uncertainty and the Fed’s meeting next week, mortgage interest rates should start to settle again into the mid-6% range. For current homeowners, the increase in mortgage rates has less impact as they continue to be the winners in today’s housing market. The typical homeowner has about $415,000 in wealth compared to the typical renter of $10,000.    

Quick Tips for  My Buyers & Sellers

BUYERS:

• Know your budget. Instead of focusing on price, figure out how much you can afford as a monthly payment. Your monthly housing payment is influenced by the price of the home, your down payment, mortgage rate, loan term, home insurance and property taxes.
• Be flexible about home size and location. Perhaps your budget is sufficient for a small home in your perfect neighborhood, or a larger, newer home further out. Understanding your priorities and having some flexibility can help you move quickly when a suitable home enters the market.
• Keep an eye on the market where you hope to buy. Determine the area’s available inventory and price levels. Also, pay attention to how quickly homes sell. Not only will you be tuned in when something great hits the market, you can feel more confident moving forward with purchasing a well-priced home. I can help with this.
• Don’t be discouraged. Purchasing a home is one of the largest financial decisions you’ll ever make. Approaching the market confidently, armed with good information and grounded expectations will take you far. Don’t let the hustle of the market convince you to buy something that’s not in your budget, or not right for your lifestyle.

SELLERS:

• Research comparable home prices in your area. Sellers need to have the most up-to-date pricing intel on comparable homes selling in their market. Know the market competition and price the home competitively. In addition, understand that in some price points it’s a buyer’s market—you’ll need to be prepared to make some concessions.
• Make sure your home is in top-notch shape. Homes need to be in great condition to compete and create a strong “online curb appeal.” Well-maintained homes and attractive front yards are major features that buyers look for.
• Work with me:  I have a strong local marketing presence and access to major real estate portals to offer significant value and help you land a great deal.
• Don’t put off issues that require attention. Prepare the home by making any repairs or improvements. Removing any objections that buyers may see helps focus the buyer on the positive attributes of the home.