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Freddie Mac Reports Fifth Consecutive Week of Decreasing Mortgage Rates
Freddie Mac (OTCQB: FMCC) released its Primary Mortgage Market Survey® (PMMS®) today (04/13/2023), revealing that the 30-year fixed-rate mortgage (FRM) averaged 6.27 percent as of April 13, 2023. This marks the fifth consecutive week of declining mortgage rates, providing a glimmer of hope for prospective homebuyers as the housing market heads into its peak season in the spring and summer.
Sam Khater, Chief Economist at Freddie Mac, commented on the trend, stating, “Mortgage rates decreased for the fifth consecutive week. Incoming data suggest inflation remains well above the desired level but showing signs of deceleration. These trends, coupled with tight labor markets, are creating increased optimism among prospective homebuyers as the housing market hits its peak in the spring and summer.”
Compared to the previous week, the 30-year FRM dropped slightly from 6.28 percent to 6.27 percent. However, when compared to the same time last year, the rates have increased significantly, with the 30-year FRM averaging 5.00 percent in April 2022.
In addition to the 30-year FRM, the 15-year fixed-rate mortgage also experienced a decrease in rates. It averaged 5.54 percent, down from 5.64 percent the previous week. A year ago, the 15-year FRM averaged 4.17 percent.
The PMMS® focuses on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. Despite the recent decrease in rates, it’s important to note that mortgage rates can vary depending on individual financial situations and market conditions.
The declining mortgage rates come amid concerns about inflation, which has been running above desired levels. However, recent data suggests that inflation may be showing signs of slowing down, which could be contributing to the decrease in mortgage rates. Tight labor markets are also playing a role in boosting optimism among prospective homebuyers, as a strong job market can provide stability and confidence in making a home purchase.
As the housing market heads into its peak season in the spring and summer, the decrease in mortgage rates may provide some relief for prospective homebuyers who have been grappling with rising home prices and limited inventory. However, it remains to be seen how the housing market will evolve in the coming months, and whether the trend of declining mortgage rates will continue. Prospective homebuyers are encouraged to closely monitor market conditions and work with trusted professionals to make informed decisions about their home purchase.
Price It Right!
Want To Sell Your House This Spring? Price It Right.
Over the last year, the housing market’s gone through significant change. While it’s still a sellers’ market, homes that are priced right are selling, and they get the most attention from buyers right now. If you’re thinking of selling your house this spring, it’s important to lean on your expert real estate advisor when it comes to setting a list price. As Realtor.com explains:
“Move-in-ready homes with curb appeal and in desirable areas—and that are priced to sell—are especially likely to move quickly this spring.”
In today’s market, how you price your house will not only make a big difference to your bottom line, but to how quickly your house will sell.
Why Pricing Your House Right Matters
Your asking price sends a message to potential buyers, especially today.
If it’s priced too low, you may leave money on the table or discourage buyers who may see a lower-than-expected price tag and wonder if that means something is wrong with the home.
If it’s priced too high, you run the risk of deterring buyers. When that happens, you may have to lower the price to drive interest when your house sits on the market for a while. But be aware that a price drop can be seen as a red flag by some buyers who will wonder what it means about the home.
To avoid either headache, price it right from the start. A real estate professional knows how to determine the ideal asking price. They balance the value of homes in your neighborhood, current market trends, buyer demand, the condition of your house, and more to find the right price. This helps lead to stronger offers and a greater likelihood your house will sell quickly.
The visual below helps summarize the impact your asking price can have:
Bottom Line
Homes priced at the current market value are selling faster and at a better price right now. To make sure you price your house appropriately, maximize your sales potential, and minimize your hassles, let’s connect today.
Using Your Tax Refund To Help You Achieve Your Homebuying Goals
Have you been saving up to buy a home this year? If so, you know there are a variety of expenses involved – from your down payment to closing costs. But there’s good news – your tax refund can help you achieve your goals by paying for some of these expenses.
SmartAsset estimates the average American will receive a $1,798 tax refund this year. The map below provides a more detailed estimate by state:
According to Freddie Mac, there are multiple ways your refund check can help you as a homebuyer. If you’re getting a refund this year and thinking about buying a home, here are a few tips to keep:
- Saving for a down payment – One of the largest barriers to homeownership is saving for a down payment. You could reach your savings goal more quickly than expected by using your tax refund to help with your down payment.
- Paying for closing costs – You have to pay fees to your lender, real estate agent, and other parties involved in the homebuying transaction before you can officially take ownership of your home. You could direct your tax refund toward these closing costs.
- Lowering your interest rate – Your lender might give you the option to buy down your mortgage interest rate during the homebuying process. That means, you could pay upfront to have a lower interest rate on your fixed-rate mortgage.
The best way to prepare to buy a home is to work with a trusted real estate professional who understands the process. They’ll help you navigate the costs you may encounter as you begin your homebuying journey.
Bottom Line
Your tax refund can help you reach your goals of homeownership. Let’s connect to discuss how you can start your journey today.
The Big Advantage If You’re Selling This Spring
Thinking about selling your house? If you’ve been waiting for the right time, it could be now while the supply of homes for sale is so low. HousingWire shares:
“. . . the big question is whether we are finally starting to see the seasonal spring increase in inventory. The answer is no, because active listings fell to a new low last week for 2023 . . .”
The National Association of Realtors (NAR) confirms today’s housing inventory is low by looking at the months’ supply of homes on the market. In a balanced market, about a six-month supply is needed. Anything lower is a sellers’ market. And today, the number is much lower:
“Total housing inventory registered at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.”
Why Does Low Inventory Make It a Good Time To Sell?
The less inventory there is on the market when you sell, the less competition you’re likely to face from other sellers. That means your house will get more attention from the buyers looking for a home this spring. And since there are significantly more buyers in the market than there are homes for sale, you could even receive more than one offer on your house. Multiple offers are on the rise again (see graph below):
If you get more than one offer on your house, it becomes a bidding war between buyers – and that means you have greater leverage to sell on your terms. But if you want to maximize the opportunity for a bidding war to spark, be sure to lean on your expert real estate advisor. While we’re still in a strong sellers’ market, it isn’t the frenzy we saw a couple of years ago, and today’s buyers are focused on the houses with the greatest appeal. Clare Trapasso, Executive News Editor at Realtor.com, explains:
“Well-priced, move-in ready homes with curb appeal in desirable areas are still receiving multiple offers and selling for over the asking price in many parts of the country. So, this spring, it’s especially important for sellers to make their homes as attractive as possible to appeal to as many buyers as possible.”
Bottom Line
If you’ve been waiting for the right time to sell your house, low inventory this spring sets you up with a big advantage. Let’s connect today to make sure your house is ready to sell.
Homebuyer Activity Shows Signs of Warming Up for Spring
The spring season appears to be warming up in housing as more and more buyers enter the market. And after rising mortgage rates sidelined so many buyers last year, that’s a good sign for sellers. Realtor.com has the latest:
“Spring is officially here, and like green shoots emerging from the bleak winter, new data suggests that more buyers are back in the market, although more subdued compared to a year ago.”
We know buyer activity is trending up because of mortgage purchase application data. According to Investopedia:
“A mortgage application is a document submitted to a lender when you apply for a mortgage to purchase real estate.”
That means the number of mortgage applications shows how many buyers are applying for mortgages. Put another way, an increase in mortgage applications means an increase in buyer demand – and as Joel Kan, VP and Deputy Chief Economist at the Mortgage Bankers Association (MBA), explains, application activity started ramping up as mortgage rates fell steadily in March:
“Application activity increased as mortgage rates declined . . . recent increases, along with data from other sources showing an uptick in home sales, is a welcome development.”
In fact, we can see how mortgage rates have a direct impact on applications over time. As rates rose dramatically last year, applications fell in response (see graph below):
The recent uptick in mortgage applications, as well as the decline in mortgage rates, is good news for sellers because it means more buyers are actively looking for homes.
What This Means for You
Buyers are coming this spring, which is typically the busiest time of the year in real estate. And as Realtor.com tells us, if you’re a seller, you need to prepare:
“If homeowners are planning to sell in 2023, now is the time to get ready.”
The means working with a local real estate agent to maximize your home’s appeal and get it listed at the ideal price for your area.
Bottom Line
The housing market is warming up for spring. If you’re thinking about selling your house and taking advantage of this recent uptick in buyer activity, let’s connect.
Hang In There If You’re Trying to Buy A Home
We’re still in a sellers’ market. And if you’re looking to buy a home, that means you’re likely facing some unique challenges, like difficulty finding a home and volatile mortgage rates. But keep in mind, there are some benefits to being a buyer in today’s market that give you good reason to stick with your search. Here are a few of them.
Long-Term Benefits Outweigh Short-Term Challenges
Owning a home grows your net worth – and since building that wealth takes time, it makes sense to start as soon as you can. If you wait to buy and keep renting, you’ll miss out on those monthly housing payments going toward your home equity. Freddie Mac puts it this way:
“Homeownership not only builds a sense of pride and accomplishment, but it’s also an important step toward achieving long-term financial stability.”
The key there is long-term because the financial benefits homeownership provides, like home value appreciation and equity, grow over time. Those benefits are worth the short-term challenges today’s sellers’ market presents.
Mortgage Rates Are Constantly Changing
Mortgage rates have been hovering around 6.5% over the last several months. However, as Sam Khater, Chief Economist at Freddie Mac, notes, they’ve been coming down some recently:
“Economic uncertainty continues to bring mortgage rates down. Over the last several weeks, declining rates have brought borrowers back to the market . . .”
Lower mortgage rates improve your purchasing power when you buy, and that can help make homeownership more affordable. Hannah Jones, Economic Data Analyst at realtor.com, explains:
“As we move into the spring buying season, mortgage rates have ticked lower, a welcomed sign of progress towards affordability.”
The recent drop in mortgage rates is good news if you couldn’t afford to buy a home when they peaked.
Home Prices Will Increase
According to the Home Price Expectation Survey, which polls over 100 real estate experts, home values will go up steadily over the next few years after a slight decline this year (see graph below):
Rising home prices in the coming years means two things for you as a buyer:
- Waiting to buy a home could mean it’ll become more expensive to do so.
- Buying now means the value of your home, and your net worth, will likely grow over time.
Bottom Line
If you’ve been trying to buy a home, hang in there. Mortgage rates have ticked down some recently, home prices are forecast to increase in the coming years, and the long-term benefits of homeownership outweigh many of the short-term challenges.
30-year fixed Mortgage Rate Trends Down to 6.28%
Freddie Mac, the government-sponsored mortgage giant, has released the results of its Primary Mortgage Market Survey® (PMMS®), revealing that the 30-year fixed-rate mortgage (FRM) averaged 6.28 percent as of April 6, 2023. This marks a decline from last week when it averaged 6.32 percent, and a significant increase from a year ago when the 30-year FRM averaged 4.72 percent.
Sam Khater, Freddie Mac’s Chief Economist, noted that mortgage rates are continuing to trend down as the traditional spring homebuying season begins. However, he also highlighted the challenges faced by potential homebuyers, particularly first-time homebuyers, due to the low inventory of homes for sale in the market.
According to Lawrence Yun, Chief Economist of the National Association of Realtors (NAR), the decline in mortgage rates over the past four weeks is a positive development for homebuyers. Compared to the recent peak of 7% average rate, the current rate of 6.28% can save a homebuyer $140 per month on a $300,000 loan.
Yun also pointed out that the fallout from regional bank collapses has led to tightening lending conditions in some areas, but residential mortgages, including VA, FHA, and conforming mortgages, continue to have government guarantees, which ensure a steady appetite for these loans.
The longer-term prospect on mortgage rates is also positive, with the possibility of rates going under 6% by the end of the year. Yun attributed this to the steady supply of new apartments hitting the market, which will limit rent growth and overall consumer price inflation, leading to the Federal Reserve potentially stopping its tightening policy. Lower rates are expected to attract more homebuyers, but it is crucial to ensure an increase in housing supply to meet the recovering demand.
Overall, the declining trend in mortgage rates is good news for potential homebuyers, but challenges such as low inventory and tightening lending conditions remain. It will be important to monitor how these factors evolve in the coming months and their impact on the housing market.
