Welcome to the wild, wild world of mortgage interest rates. Just when we needed a bit of help with the national housing market, the Fed decided that war-driven inflation was more important to address than a stagnant housing market.
But even with little help from the Fed, it’s easy to see that the national housing market is ready to take off. Despite the Fed holding rates steady and mortgage rates ticking slightly upward, buyer activity remains strong.
In the Eugene and Springfield markets, there is no shortage of ready homebuyers right now. Our biggest challenge is the lack of available inventory. At a time of year when listings typically begin to increase, that just isn’t happening yet.
My prediction remains the same: don’t expect mortgage rates to change drastically in either direction in the foreseeable future. For homebuyers, it makes little sense to wait. For sellers, now is the time to take advantage of a strong pool of buyers who are struggling to find homes to purchase.
The following is an article from the National Association of Realtors blog.
Mortgage rates ticked back up this week, averaging 6.30%, Freddie Mac reports. Despite the increase, rates remain well below the 6.76% average from a year ago. And buyers are starting to show up in force: Mortgage applications to purchase a home—often viewed as a gauge of future homebuying activity—jumped 21% in the latest week compared to a year ago, according to the Mortgage Bankers Association.
“After a brief pause, in part because of the elevated geopolitical uncertainties, potential home buyers certainly appear to be moving forward this spring and taking advantage of the more favorable inventory conditions in most parts of the country,” MBA Chief Economist Mike Fratantoni says.
Freddie Mac Chief Economist Sam Khater concurs. “It is clear that purchase demand continues to hold up as prospective buyers react to both modestly lower rates and more inventory to choose from than [in] the last few years,” he says.
Accepting a New Norm?
More consumers may be adjusting to a new normal in rates, showing greater willingness to move forward even if it means giving up their ultra-low mortgage rate from a few years ago. A newly released Coldwell Banker report found that real estate professionals say one in three sellers are showing willingness to give up their sub-5% mortgage rate this spring.
The so-called “lock-in effect” has played a major role in the housing market, with the report noting it has been “one of the biggest and most persistent constraints on housing supply” as homeowners refuse to sell.
Now, signs are showing that could finally be easing.
“On the seller side, many homeowners are listing because their circumstances require a change, even if it means giving up a historically low mortgage rate,” says Jason Waugh, president of Coldwell Banker Affiliates. “Working through the lock-in effect will take time. But we are starting to see early signs that it is loosening, particularly in the Midwest and in the West, which could have a meaningful impact on inventory.”
Slightly more than half of outstanding mortgages have a rate that is 4% or lower, while 78% of borrowers have a rate below 6%, according to an analysis from Realtor.com®.
Mortgage Rates This Week
The Federal Reserve voted Wednesday to hold its benchmark short-term rate unchanged at its April meeting. While the Fed doesn’t directly set mortgage rates, its decisions can influence them. Mortgage rates, however, are more closely tied to long-term Treasury yields, which economists said moved higher this week amid rising oil prices tied to ongoing geopolitical tensions. That pushed the bond yield—and then mortgage rates—up as well.
Have An Awesome Week!
Haas Team Real Estate
541.349.2620