Mortgage rates fell for the fourth week in a row, approaching 6%.
Interest rates on 30-year fixed mortgages fell to 6.09% from 6.13% last week, according to Freddie Mac. Interest rates have fallen almost a percentage point since mid-November, allowing as many as 3 million buyers to buy mid-priced homes.
The recent drop in interest rates is encouraging for discounted buyers who have regained some of the purchasing power they lost last year. Still, affordability and economic concerns continue to constrain overall demand.
Mortgage owner Jason Sharon told Yahoo Finance that interest rates have improved, but are nowhere near what they were two years ago. “Unless another global catastrophe hits, it is unlikely that interest rates will be at his 3’s again. It doesn’t mean you should wait for
“Affordability remains a major challenge”
Falling interest rates are not enough to fully restore homebuyer activity.
A survey conducted by the Mortgage Bankers Association in the week ending Jan. 27 showed the number of mortgage applications increasing for the second straight week compared to the previous week on a seasonally adjusted basis. A 10% reduction was found. Overall, purchasing activity is down 41% from the same week last year.
One reason for the slowdown may be the lack of affordable homes for sale to first-time buyers. Only 42% of new and existing homes for sale are considered affordable for the typical household, according to January data from the National Association of Realtors, a post-Great Recession is the lowest level of
The inventory problem could continue this year as many homeowners are reluctant to let go of the ultra-low interest mortgages they secured in the first two years of the pandemic.
“More than 86% of mortgaged homes today have interest rates below 6%. It may not even be a problem.
Interest rates have doubled from a year ago, and home buyers today face monthly mortgage payments that are about $700 higher than a typical mortgage, according to NAHB.
The median listing price in January was $400,000, unchanged from December, but still 8.1% higher than a year ago, according to Realtor.com.
“For buyers of median-priced homes today, the down payment is lower than it was last summer,” said George Ratiu, economic research manager at Realtor.com, in a statement. In the news, affordability remains a major challenge, especially for first-time buyers.”
Price reduction ongoing
Home sellers have started the year by dangling more price cuts and incentives to lure buyers who left the market at the end of 2022. These triggers are still occurring.
A Realtor.com study found that the percentage of homes on sale rose to 15.3% in January from just 6% a year ago. Builders are also in the game. Builder confidence improved in January for the first time in a year, but it still offers cash for price buydowns, markdowns and closing costs.
For example, one of Monte Miner’s clients got a $15,000 discount on a new home listed for $409,000 in January.
A realtor at Ironwood Fine Properties in Phoenix said, “You can find additional incentives and motivations from builders, especially in this current market.”
Gabriella is a Personal Finance Reporter at Yahoo Finance. follow her on her twitter @__gabriellacruz.
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