As of Monday, September 16th, average 30-year fixed mortgage rates have dropped to 6.12%, the second-lowest level seen in almost two years. This decline represents a significant reduction from the 7.5% peak in April, giving homebuyers an extra $30,000 in purchasing power since July, or around $200 in monthly savings. Median monthly housing payments also dropped to $2,534, the lowest since January, making this a more favorable time for those considering buying a home.
In addition to falling mortgage rates, the Federal Reserve announced a surprising 50 basis point (0.5%) rate cut during their September 18th meeting, with further gradual reductions of 25 basis points expected in the coming months. While this could lead to a slight uptick in mortgage rates in the short term, the long-term trend suggests that rates will continue to decrease. This drop has been driven primarily by steadily improving inflation, which has seen rates fall by over 1.10% since the same time last year.
The current market landscape is also favorable for buyers as housing inventory has risen by 20% compared to last year. More sellers are entering the market, offering increased options for prospective buyers. The question many buyers are now asking is whether they should purchase a home now or wait for further rate cuts.
For those with the financial means, it may be an ideal time to buy before competition among buyers intensifies. While waiting for rates to fall further might seem tempting, there is a risk of prices increasing as more buyers flood the market. Locking in a mortgage rate at these levels allows buyers to take advantage of lower monthly payments and build equity faster over the loan term.
Despite the favorable conditions, it’s essential to stay cautious, as the housing market has been unpredictable. For instance, higher mortgage rates in the past two years have not significantly reduced home prices as expected. Many sellers have held onto their homes due to lower pandemic-era mortgage rates, further reducing supply and sustaining high prices. Although mortgage rates are falling, home prices remain near record highs, especially in areas with high demand like Texas and Upstate New York.
For those wondering if rates will fall further in 2024, experts suggest that while gradual declines are likely, significant reductions are not expected. The current rates already reflect much of the anticipated Fed cuts, and mortgage rates may stabilize as inflation continues to improve.
For home sellers, the recent drops in mortgage rates could lead to increased competition. Buyers who were previously priced out due to high rates are likely to re-enter the market, boosting demand for available listings. This is an opportune moment for sellers to prepare for more interest in their homes.
If you’re ready to buy, locking in a mortgage rate today could be a wise move, as rates haven’t been this low in two years. With lower rates, you can qualify for larger loans or reduce your monthly payments, maximizing your investment. The longer you wait, the more competition you may face, so now could be the best time to act if you’re financially prepared to purchase a home.
