Two Factors Explaining Why The Current Trend In Mortgage Rates Is Favorable For Sellers
If you've postponed selling your house due to concerns about high mortgage rates, the recent rate decline brings encouraging news. Since last October, when rates peaked at 7.79%, they have consistently decreased. They have remained below 7% for over a month now, as illustrated in the graph below:
Although they won't return to the 3% levels witnessed during the 'unicorn' years, there is an anticipation that mortgage rates will continue to decrease soon. Dean Baker, Senior Economist at the Center for Economic Research, provides insights into this expectation:
“It also appears that mortgage rates are now falling again. They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.”
Here are two explanations for why the current trend, coupled with the expectation that it will persist, brings positive news for you.
You Might Not Feel As Constrained By Your Current Mortgage Rate
As mortgage rates have considerably decreased in just a few months, you may find yourself less constrained by your current mortgage rate. In the past, when rates were higher, relocating to a new home might have meant exchanging a low rate for one approaching 8%.
With rates on the decline, that gap between your existing mortgage rate and the prospective new rate is not as substantial as before. This renders the prospect of moving more financially feasible than just a few months ago, as elucidated by Land Lambert, Founder of ResiClub.
“We might be at peak “lock-in effect.” Some move-up or lifestyle sellers might be coming to terms with the fact 3% and 4% mortgage rates aren’t returning anytime soon.”
An Increased Number Of Buyers Are Anticipated In The Market
Data from Bright MLS, indicates that the primary deterrent for potential buyers in initiating homeownership has been the prevalence of high mortgage rates, as illustrated in the graph below:
Reduced mortgage rates present an opportunity for buyers to potentially save money on their home loans, enhancing the appeal and affordability of homeownership. With rates on the decline, a growing number of buyers may feel inclined to re-enter the market, leading to increased demand for homes.
If you've hesitated to sell due to concerns about higher mortgage rates or perceived buyer scarcity, the recent drop in rates signals that it may be the opportune moment to take action. When you're prepared, reach out to the Focus Real Estate Team to facilitate your move.