Mortgage rates dipping. Will lower rates spur more homebuyers?

Mortgage rates dipping. Will lower rates spur more homebuyers?

by Catherine Reagor

Mortgage rates have fallen for the past three weeks, moves that could spur more homebuyers.

The current average 30-year mortgage rate is 6.87%, and three weeks ago it was 7.03%, according to Freddie Mac.

“Mortgage rates fell for the third straight week following signs of cooling inflation and market expectations of a future Fed rate cut,” said Sam Khater, Freddie Mac’s chief economist. “These lower mortgage rates coupled with the gradually improving housing supply bodes well for the housing market.”

The difference in a mortgage payment at the end of May and now isn’t big. Also, rates are still high compared to the about 3% at the end of 2021.  

The payment on a $400,000 mortgage was $2,669 with a 7.03% rate, compared to $2,626 now with a 6.87% rate.

But the drop could be enough for some buyers.

The average 30-year rate was almost 8% last fall.

If the lower mortgage rates spur homebuying, it will show up in next month’s pending sales.

“Interest rates continue to drop, encouraging homeowners to list properties for sale,” said Sheryl Bowden, president of the Phoenix Realtors. “While many buyers are just accepting rates, as they come down, more buyers should be able to qualify for mortgages.”