Prospective homebuyers will need to wait a little longer for interest rates below 6%. The average mortgage interest rate for 30-year, fixed-rate mortgages rose to 6.77% this week, Freddie Mac reported.
Last week’s average was 6.64%, and a year ago, 30-year mortgages averaged even lower at 6.32%.
The average interest rate for 15-year mortgages also rose this week to 6.12%. This is up from last week when rates were finally below 6% at 5.90%. This week’s average is also up compared to this time last year, when 15-year mortgages had rates averaging 5.51%.
As the economy continues to stay strong, it’s unlikely that mortgage rates will drop substantially anytime soon.
“On the heels of consumer prices rising more than expected, mortgage rates increased this week,” Sam Khater, Freddie Mac’s Chief Economist, said. “The economy has been performing well so far this year and rates may stay higher for longer, potentially slowing the spring homebuying season.”
“According to our data, mortgage applications to buy a home so far in 2024 are down in more than half of all states compared to a year earlier,” explained Khater.
Despite high home prices, some buyers may still be ready to buy a home. If this includes you, you’ll want to make sure you’re getting the best interest rate based on your income and credit score. Visit Credible to compare rates, choose your loan term and get preapproved with multiple lenders in minutes.
NEARLY 89% OF U.S. HOMEOWNERS WITH MORTGAGES HAVE AN INTEREST RATE BELOW 6%: REDFIN
Homebuyers remain weary as rates rise
Mortgage applications are going down, as homebuyers grow concerned over interest rates rising. With experts predicting rates dropping below 6% sometime this year, prospective buyers are avoiding buying until this happens.
Despite buyers’ unwillingness to buy, more homes are hitting the market. Data from Realtor.com shows listings up by 12.8% for the first week of February.
“It was the biggest jump in nearly three years,” said Realtor.com economist Jiayi Xu.
Sellers who took out a mortgage when interest rates were at their highest may be looking to sell now that interest rates have lowered slightly.
“Sellers are closely monitoring mortgage rates, and adjusting their selling strategies accordingly,” said Xu.
If you’re looking to purchase a home in today’s market, you can explore your mortgage options by visiting Credible to compare rates and lenders all in one place.
MILLENNIALS ARE DESPERATE TO BUY A HOME, MOST WILLING TO PAY A MORTGAGE RATE ABOVE 7%: SURVEY
Home prices aren’t dropping
As mortgage rates ebb and flow, high listing prices remain constant in most parts of the country. Fannie Mae predicts prices will rise by 3.2% this year. This is low compared to the 5.6% rise in home prices last August.
“It’s a savagely unhealthy housing market,” Logan Mohtashami, the lead analyst at HousingWire said in a Business Insider interview. “But it’s also a market that just had too many people chasing too few homes.”
Since there are still many homebuyers looking for homes, prices aren’t likely to drop until the market cools. This is likely why Goldman Sachs predicts an even higher increase in home prices of 5%.
The average price of a home in the U.S. was over $417,000 at the end of last quarter, according to the Federal Reserve Bank of St. Louis. While that’s lower than average of $479,500 in Q4 2022, it’s still not affordable for the average buyer who has an average annual income of $74,580.
Prices may be high, but if you think you’re ready to shop around for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders in minutes.
THIS IS THE #1 CITY FOR FIRST-TIME HOMEBUYERS, AND OTHER HOT US HOUSING MARKETS
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