Mortgage rates sharply lower, further moves down to come?

Mortgage rates sharply lower. Is this the start of a trend?

The national average for a 30-year, fixed-rate mortgage was down 0.19% to 7.62%*. This is the first day in the past week that the national average for a 30-year, fixed-rate mortgage ended lower than it started. Experts cited Monday’s bond market holiday as a partial driver of the dip in rates.

There’s also a bit of ‘wait and see’ in the market ahead of Thursday’s consumer price index announcement. If we get a number above or below expectations, that could give the mortgage market a clearer direction.

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In a recent article from Yahoo! Finance, economists from Bank of America were surveyed on current market conditions. The key takeaway is that current conditions are nowhere near the housing crash of 2008. The current conditions are more like the housing market in the 1980s than the 2000s.

In 2008, builders couldn’t get houses built fast enough and mortgages were a lot easier to qualify for. Homebuilders have dialed back significantly, and there are now higher standards in the mortgage industry than there were prior to 2008.

According to economists, this market is much closer to 1980 in which the Federal Reserve hiked interest rates to combat high prices, and indirectly caused mortgage rates to increase. That sounds almost exactly like the situation today, except the 1980s didn’t have a once-in-a-lifetime pandemic that caused housing prices to spike.

The key takeaway from the economists surveyed was that while the market may be a challenge, it’s far from the situation in 2008, and should start to soften once the Fed is able to tame inflation and bring price stability back to the market. Have you ever thought about how your financial, physical, and mental wellness are interconnected? The team at Guaranteed Rate did. The new Rate App provides mortgage and financial tools that can help you meet your mortgage needs, but it also offers yoga, nutrition, meditation, and strength classes taught by experts.

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Where are the hottest & coolest markets in the country?

While elevated rates and higher than normal prices have lead to a tough national housing market, there are still regions and metro areas that are seeing homes move quickly. According to recent data from U.S. News & World Report, Miami Beach, FL, Tampa, FL, Charleston, SC, and Alexandria, VA saw the biggest increases in home prices in August 2023. To give some context, Miami Beach topped the list with median homes prices increased by 7.7% year-over-year.

Areas that cooled off the most in August were Birmingham, AL, Cape Coral, FL, New Orleans, LA, and Boise, ID. Birmingham lead the way with the median home price down 21.7% year-over-year.

While the current market can be a challenge in some areas, we’ve shifted to a housing market that’s much more location dependent than in year’s past. Certain markets cool while others heat up, sometimes in the same state.

* National average rates accurate as of 10/10/23 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate.