Mortgage rates are falling quickly, dropping from a two-decade high of 8 percent to 7.4 percent in the last three weeks, giving homebuyers an opportunity to lock in a lower rate, according to a new report from Redfin.
A series of macro-economic events and indicators helped bring rates down. That included the Federal Reserve deciding against another interest-rate hike, the U.S. Treasury announcing plans to issue less long-term debt than expected and the job market growing slower than expected.
Redfin economists recommend that serious homebuyers consider locking in a mortgage now while average rates sit at their lowest level since mid-September. That’s because while rates could continue their downward trend, it’s also possible they will increase soon. The downward trend could reverse if this month’s economic news goes the other way. For instance, rates could increase if the Nov. 14 CPI report shows higher-than-expected inflation.
“I’m advising buyers to lock in a mortgage rate as soon as they drop to a number where they can make the math work,” Seattle Redfin Premier agent Hal Bennett said in a release. “Payments could go up hundreds of dollars overnight if the winds shift on mortgage rates, and all of a sudden you won’t be able to afford the home you want or you won’t qualify for a mortgage. This window of opportunity could be narrow.”
Though rates are more than double pandemic-era levels and some homebuyers are still priced out of the market, rates going from 8 percent to 7.4 percent shave a few hundred dollars off a monthly mortgage payment in many areas. A homebuyer in Seattle, for instance, would pay $4,984 per month for the median-priced home ($775,000) with a 7.4 percent mortgage rate, compared with $5,240 with an 8 percent rate.
There are a few other glimmers of hope emerging for buyers. While inventory remains low, there has been an unseasonal uptick in the total number of homes for sale, which is at its highest level since the start of the year. New listings rose 1.5 percent from a year ago during the four weeks ending Nov. 5, just the second increase since July 2022.
Additionally, nearly 7 percent of homesellers dropped their asking price – the highest portion on record, Redfin added.