Mortgage pricing is mostly driven by long-term rates, so the shape of the yield curve matters too, says Shampa Bhattacharya, director Fitch Ratings, Told. The Fed’s latest decision to raise rates at a slower pace “could be an incremental positive for mortgage markets as long-term rates continue to decline.”
Thank you for reading this post, don't forget to subscribe!Bhattacharya said 30-year mortgage rates peaked at more than 7% in November 2022 but have since come down to 6.13% — following a move to the long end of the yield curve from more than 4% to 3.5 in October and November. After moving up to %, Bhattacharya said .
The 10-year Treasury note, which determines mortgage rate movements, fell to 3.39% on Wednesday. The rate was 3.43% in mid-January Bureau of Labor Statistics Released the Consumer Price Index for December, which showed a decline for six consecutive months.
Lawrence Yoon, chief economist and senior vice president of research, recently moderated the soft rate hike due to low inflation. National Association of Realtors said, noting that the central bank is showing a willingness to adjust policy based on the data.
While Fed Chairman Jerome Powell said in a press conference that he “doesn’t see us cutting rates this year,” Yoon expects a rate cut by the end of 2023.
“As rising apartment vacancies cool inflation in the coming months, the Fed will adjust to no rate hikes through the middle of the year and even a rate cut through December. That’s good news for mortgage rates. which will likely fall to 5.5% by the end of the year,” Yun said.
The 30-year fixed rate stood at 6.16% on Tuesday, down from 6.5% a month earlier. optimum blue data on HousingWire’s Mortgage Rates Center, Rates are still about 60% higher than a year ago, at 3.8% in February 2022.
There are concerns, however, that rising interest rates will postpone the dream of many homeowners, Justin Barry, partner at law firm Morris, Manning and Martinnoted.
“Rising interest rates and increased mortgage rates present another homeowner barrier for the current renter pool,” Barry said.
opportunities for buyers
With an increasing number of homes for sale to buyers and a drop in prices across the housing market, it is expected that this year will provide more opportunities.
“Median list prices down 11% from June 2022 peaks,” George Ratiu, manager of economic research realtor.com, Told.
,For the average priced home buyer, these lower prices translate into a savings of $9,800 on a 20% down payment. This is a welcome change for families who are still feeling the pressure of high prices and high borrowing costs.
Existing home sales have declined over the past 12 months, falling from an annualized rate of 6.5 million homes in January 2022 to a little over 4 million in December. This marks the slowest pace since 2010.
As of this week, US home prices have declined for five straight months starting last November. S&P CoreLogic Case-Shiller National Home Price Index,
Mortgage loan originators don’t expect the Fed’s rate hike to have as much of an impact on buyers. Lo said first-time buyers in particular have become more realistic about the higher rate environment and are looking to enter the market.
“I think you’re going to see a bigger push for first-time home buyers than anything else,” Ben Cohen, Guaranteed Rate’s managing director, said in a recent interview with HousingWire.
“The rent is more expensive. Their landlord is calling them saying, ‘I’m raising your $2,500 rent to $3,000.’ “They’ll just go buy a house,” Cohen said.
Andrew Marquis, Regional Vice President crosscountry mortgagealso noted that it is doubling down on what it was pre-approving in the fall because of the drop in rates.
“We have a lot of customers approaching us for pre-approval. They’re looking for fully underwritten approvals so they can potentially waive the contingencies again,” Marquis said.
