Mortgage Rates Dip Back Toward 7%: Experts Adjust Year-End Outlook and Homebuyers Hesitate
Are you in the market to buy a home? If so, you may want to pay attention to the recent fluctuations in mortgage rates. The average 30-year fixed mortgage rate has dipped back toward 7% this week, settling at 7.09%, according to Freddie Mac. This is the first time the weekly average rate has fallen in over a month.
Recent rate volatility, including this week’s drop from 7.22% and last month’s steady rise, has prompted some financial institutions to modify their mortgage outlook for the rest of 2024. This change in rates has impacted both sellers and buyers in the housing market.
According to Sam Khater, Freddie Mac’s chief economist, an environment where rates continue to hover above 7% impacts both sellers and buyers. Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated. These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment.
Experts have adjusted their year-end outlook for mortgage rates due to robust economic data and stubborn inflation. Fannie Mae increased its year-end prediction to 6.4% from 5.9% earlier this year. The National Association of Realtors now expects average rates to settle at 6.5% by year-end, modified from the 6.3% predicted at the beginning of the year.
Higher-for-longer rates mean homebuyers must shell out more of their monthly paycheck to afford a home. With this week’s average rate, homebuyers would pay $1,611 monthly on a $300,000 home with a 20% down payment. In contrast, the same house and payment cost $1,004 in the same week in 2021 when the average mortgage rate was 2.94%.
The overall climate is creating pessimism about the housing market, with nearly 80% of consumers saying now is a bad time to buy a home. Fewer Americans think mortgage rates will fall over the next 12 months.
If you’re considering buying a home, it’s essential to stay informed about the current mortgage rates and how they may impact your purchasing decision. Keep an eye on the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more. And remember to consult with a financial advisor or mortgage expert to make the best decision for your individual situation.
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