Did mortgage rates react to market volatility?
Most American equities and commodities markets started the day down due to the sell off in the Asian markets but clawed their way back to ‘not as far down’ by the end of the trading day.
The bond market started the day strong, but dipped shortly after, and closed sideways. Influenced by the bond market, the national average rate for a 30-year, fixed-rate mortgage ended down 0.06% to 6.34%* on Monday. That’s well below the six-month low.
Markets in Asia have surged upwards overnight, but it remains to be seen if they will continue to influence the rest of the globe again.
What is the U.S. bond yield telling us about mortgage rates?
A recent article from U.S. News & World Report reviewed the current bond yield levels and offered insights into where they could take mortgage rates.
The U.S. bond yield has dipped and that could suggest that mortgage rates have a chance to head even lower. U.S. government securities are very influential in determining home loan costs. A lower yield can often send rates lower, and the market recently saw a sizable dip.
How low can rates get? It’s unclear how far they could fall, but we’re unlikely to hit pandemic lows. Isaac Boltansky, the managing director and director of policy research and BTIG, was asked about how big of a change we could see, and he stated, “It should be good for home buyers and home sellers, because we will find a new equilibrium, and that will be a clearing price for more sales and even for more refis, but it’s exceedingly difficult to see us getting back to where we were before.”
Where are listed homes seeing price cuts?
Price cuts in the U.S. housing market have reached a two-year high according to recent data. Price cuts in July 2024 reached 18.9% of homes, that’s up 3.4% year-over-year.
Ralph McLaughlin, a senior economist at Realtor.com, stated, “First, rates remain higher than expected, which means there is less buyer activity. Second, the prospect of lower mortgage rates coming this fall may have induced some buyers to wait. This combo has led sellers to lower their prices in order to attract more buyers.”
Where are price cuts on the rise? Out of the 50 largest markets, 47 saw price reductions increase in July. The largest increase in the share of price reductions were Tampa, FL at 9.7%, Charlotte, NC at 9.5%, and Phoenix, AZ at 9.4%.
* National average rates as of 8/5/2024 are included for educational purposes only and are not advertised rates from Rate.
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