Lisa Mailhot | September 24, 2024
Buyers
The Federal Reserve's recent big rate cut has sent ripples through the housing market, leaving many potential homebuyers wondering: Is now the right time to move? While this policy shift does pave the way for potentially lower mortgage rates, it's essential to understand that improved affordability isn't as straightforward as it might seem.
Mortgage rates, which peaked at a 23-year high of 7.8% last October, have gradually declined since July. According to Freddie Mac, the current average rate for a 30-year mortgage sits at 6.09%. This drop translates to significant savings for homebuyers. For instance, on a median-priced home of $416,700 with a 20% down payment, today's rates could save you about $312 per month compared to rates from May.
However, it's crucial to temper expectations. As Danielle Hale, chief economist at Realtor.com, points out, "We've seen the bulk of the easing that we're going to get already this year." Mortgage rates might even tick up slightly before declining again.
The reality is that while lower rates do increase purchasing power, a 6% mortgage rate still poses affordability challenges for many Americans. This is mainly due to the staggering 49% increase in home prices over the past five years, which has far outpaced wage growth.
So, what's a prospective homebuyer to do? Here are a few key considerations:
For those already owning a home, refinancing options are worth considering. With refinance applications surging 24%, according to the Mortgage Bankers Association, many homeowners are finding opportunities to lower their monthly payments significantly.
Whether you're a first-time homebuyer or looking to move to Orange County, navigating today's real estate market requires careful consideration and expert guidance. While the Fed's rate cut offers a glimmer of hope for improved affordability, the path forward isn't without its challenges.
Let's connect if you're ready to explore your options and find the perfect home in this dynamic market. Together, we can create a strategy that aligns with your goals and helps you make the most of current market conditions.
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