Could mortgage rates slide further?

Could mortgage rates continue to slide?

The national average for mortgage rates has recently seen their biggest single-week drop since July 2022, but could they continue to cool off? CBS News spoke to several industry experts to better understand what could happen to mortgage rates over the coming months.

When asked about what’s occurring with mortgage rates, Joel Kan, the Mortgage Bankers Association Vice President and Deputy Chief Economist, stated, “Last week’s decrease in rates was driven by the U.S. Treasury’s issuance update, the Fed striking a dovish tone in the November FOMC statement, and data indicating a slower job market. Applications for both purchase and refinance loans were up over the week but remained at low levels. The purchase index is still more than 20 percent behind last year’s pace, as many homebuyers remain on the sidelines until more for-sale inventory becomes available.”

However, CBS detailed three scenarios in which mortgage rates could fall further.

First, if the Fed continues their pause in interest movement for a continued period, rates could head lower.

Also, rates could drop if the Fed chooses to cut rates sooner rather than later.

Lastly, inflation could cool off dramatically and send rates lower. The Fed has been hiking rates to help inflation head lower. Their rate hikes may have a delayed effect on the market, and could cause inflation to further dip.

Is the housing market getting more buyer friendly?

A recent report from Redfin stated that the current housing market is the best time to buy since mid-September. The report cites falling mortgage rates and cooling housing prices as key factors in their conclusion.

Hal Bennett, a Seattle Redfin Premier agent, stated, “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. 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.”

The report detailed multiple markets that have seen decreases in home prices, including Austin, TX and Tampa, FL. It also mentioned several markets that have seen double digit increases in available homes, such as San Jose, CA and Phoenix, AZ.

Denver home prices hold steady, but market shifts

According to recent data, home prices in the Denver metro area held steady in October, but there were signs that the market is starting to soften.

The median home price in the Denver metro area stayed at $585,000 in October. However, 57.9% of closer transactions included an average seller concession of $9,390. That’s up from September which had 56.4% of closings with an average seller concession of $9,214. This could be a sign that housing prices could start to cool off over the winter.