Embracing the New Normal: Homebuyers Adjusting to Mortgage Rates

Lisa Mailhot  |  July 18, 2023

Buyers

Embracing the New Normal: Homebuyers Adjusting to Mortgage Rates

 

Before considering selling your house, it's crucial to understand the current state of the housing market. An encouraging trend is emerging as homebuyers adapt and become accustomed to today's mortgage rates, which are now the new normal.

To gain a deeper understanding of recent mortgage rate developments, the following graph illustrates the trend for the 30-year fixed mortgage rate from Freddie Mac since last October. As evident from the graph, mortgage rates have maintained a relatively steady range of approximately 6% to 7% over the past nine months:

According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), mortgage rates play a significant role in influencing buyer demand and, consequently, home sales. Yun emphasizes the positive impact of stable rates, stating: 

“Mortgage rates heavily influence the direction of home sales. Relatively steady rates have led to several consecutive months of consistent home sales.”

For sellers, the news that home sales are currently consistent is reassuring. It indicates that buyers are actively in the market, ready to purchase properties. To provide further context on the impact of mortgage rates on demand, consider the following:

When mortgage rates experienced a sharp increase last year, rising from around 3% to 7%, many potential buyers were taken aback and chose to delay their plans to buy a home. However, with the passage of time, the initial shock has subsided. Buyers have become more familiar with current mortgage rates and have accepted that the historically low rates of the past few years are no longer attainable. According to Doug Duncan, the Senior Vice President and Chief Economist at Fannie Mae, he states:

“. . . consumers are adapting to the idea that higher mortgage rates will likely stick around for the foreseeable future.”

In fact, a recent survey conducted by Freddie Mac reveals that 18% of respondents plan to purchase a home within the next six months. This means that nearly one out of every five individuals surveyed intends to buy in the near future, indicating that buyers are actively planning their moves in the coming months.

Naturally, mortgage rates are not the sole factor influencing buyer demand. Regardless of the current economic environment, people will always have reasons to move, whether due to job relocations, changes in households, or personal motivations. As a seller, you can take confidence in the fact that there is a market for your house today, with strong demand as buyers adjust to the current rate landscape.

Bottom Line

The perception of mortgage rates among buyers is evolving as they become accustomed to the new normal. Steady rates contribute to robust buyer demand and consistent home sales. Let's connect and get your house on the market, putting it in front of these motivated buyers.


RECENT BLOG POSTS

Key Strategies for Tomorrow's Wealth Managers

Explore three crucial strategies wealth managers must adopt to prepare for significant industry shifts, including the integration of technology, recruitment of new adv… Read more

Harris' Homeownership Plan Boosts Homebuilder Stocks Amid Fed Rate-Cutting Expectations

Homebuilder stocks surge as Kamala Harris proposes housing reforms and the Federal Reserve hints at rate cuts. Discover how these factors could reshape the real estate… Read more

Fine-Tuning Financial Forecasts: July's Inflation Insights and Mortgage Trends

Explore the latest insights from July's inflation data and its subtle impact on future mortgage rates. This article delves into the PCE price index, Federal Reserve st… Read more

JLo and Affleck's $68 Million Split: The Hefty Price Tag of Celebrity Mansions

Explore the staggering monthly costs associated with maintaining a celebrity mansion, as revealed by Jennifer Lopez and Ben Affleck’s recent real estate troubles. Lear… Read more

Supreme Court Showdown: NAR's Strategic Defense Against DOJ's Renewed Probe

Explore the escalating legal battle as the National Association of Realtors (NAR) prepares to take its confrontation with the Department of Justice (DOJ) over alleged … Read more

Securing Your Legacy: Choosing the Right Trust for Wealth Protection

Explore the differences between incentive and protective trusts to safeguard your wealth and support your heirs. Learn how each trust type can influence the next gener… Read more

California's Bold Move: New Laws to Tackle Housing Crisis

Governor Newsom signs two bills expanding housing options in California. Learn how AB 2835 and AB 3057 aim to address homelessness and increase affordable living space… Read more

Patience Pays Off: The Delayed Benefits of Fed Rate Cuts for Homeowners and Investors

Homeowners and investors anticipating lower mortgage rates after the Fed cuts interest rates may have to wait. Learn why longer-term Treasury yields are a better indic… Read more

Homie's Antitrust Lawsuit Against NAR Unveiled

Discover the groundbreaking antitrust lawsuit filed by Homie against the National Association of Realtors and key industry players, alleging conspiracies to stifle inn… Read more

We are excited to assist you in finding your perfect home

Let's find a time that suits you best to chat about your goals, show you how we work, and figure out how we can help you the most