In the face of a variety of predictions seeing a flat housing market for 2023, the Federal Home Loan Mortgage Corporation announced a decline in mortgage rates.
The corporation, otherwise known as Freddie Mac, notes that rates are now “at their lowest level since September of last year, boosting both home buyer demand and home builder sentiment.”
Although encouraging, the latest 6.1% rate is still significantly higher than what was recorded exactly a year ago when the number stood at 3.2%. On the other hand, the rate has swiftly declined from a high of around 7.2% in October.
The latest declining rates, reports Freddie Mac, should provide a “much-need boost to the housing market, but the supply of homes remains a persistent concern.”
The rate for a 15-year mortgage, meanwhile, which is often used for those refinancing their homes, is now down to around 5.2%.
The new rate appears to be having an immediate impact: according to the Mortgage Bankers Association, mortgage application volume has seen a 28% increase in the last week.
What role the reduced rates will play in the early 2023 housing market remains unclear. According to the real estate listing site Redfin, active listings are currently up around 21%. But home prices remain some 11% higher than where they were a year ago.
In a statement, Nadia Evangelou, senior economist with the National Association of Realtors, asserted that the fall in mortgage rates “creates opportunities for many buyers, as a lower mortgage rate brings down the monthly payment.”
Evangelou added: “At the same time, data shows that sellers are more willing to negotiate as homes stay on the market longer.”
How things play out for the coming months remains uncertain, notes the New York Post.
“Higher prices and a doubling of mortgage rates has made homebuying much less affordable for many people,” the publication notes of 2022 trends.
But recent rate declines “could give some homebuyers new hope,” the Post adds.
By Garry Boulard
