The average weekly rate on the 30-year fixed mortgage saw a slight decrease to 6.95% from 6.99% the previous week, according to data from Freddie Mac and Mortgage News Daily. However, this minor drop in rates may not be significant enough to benefit budget-conscious homebuyers. With the Federal Reserve signaling only one rate cut for the year, any substantial decline in mortgage rates is not expected until at least the end of the year, possibly extending into 2025.
A recent study revealed that many homebuyers, especially first-timers, are waiting for a much lower rate before re-entering the market. The current market conditions due to inventory constraints are not likely to break the mortgage rate lock-in effect anytime soon. According to Realtor.com senior economist Ralph McLaughlin, those hoping for a significant decrease in rates this year may be disappointed. While there is optimism for rate cuts in the future, current sentiment reflects frustration with the lack of purchase affordability.
Despite a brief surge in mortgage applications, overall demand remains lower compared to the same period last year. New mortgage applications increased by 9%, with a significant rise in refinancing activity. With the current average rate, a homebuyer would pay around $1,600 monthly on a $300,000 home with a 20% down payment, according to the Yahoo Finance mortgage calculator. Homebuyers are eagerly watching for potential rate decreases in the coming months, as economists predict multiple rate cuts over the next few years to make homeownership more accessible.
