Mortgage Rates Continue to Drift Down

Mortgage Rates continue to come down as we head into the last week of 2022. This trend will begin to set us up in 2023 for a healthier housing market ahead.  Earlier this year, the 30-year fixed interest rate spiked to a high of 7.08% after the steepest climb in over 40 years.  Today, Freddie Mac 30-year rate is resting at 6.27%. Earlier this year the housing market was shocked by the rapid increase in interest rates and the doomsday banter began calling for a housing bubble.

The recent data supports that there is no indication of a crash on the horizon.  Sure, we have seen home price appreciation decelerate, and in many cases, even drift down a bit, but in no way does this indicate a crash like we experienced back in 2008.

Today, sellers have more equity in their homes than during the Great Recession. The borrower profile is considerably stronger under current guidelines than during the period of stated income, stated asset, and 100% financing loans of the early 2000’s.  And finally, there is a shortage of inventory on the market compared to the gluttony of housing that was available for sale then.  These factors are keeping pricing stable during this economic downturn that we are all experiencing.

Sellers have been reluctant to put their homes on the market for several reasons, but the predominate explanation has to do with the fact that according to Sam Khater, Freddie Mac’s Chief Economist, “more than two-thirds of current homeowners have a fixed mortgage rate of below four percent.”  This is preventing those homeowners from listing their homes for concerns of obtaining new home financing at a higher interest rate. 

With the interest rates drifting back down as we have seen over the past 6 weeks, and the prospect of a continuation of interest rates declining, we will begin to see the market starting to heat up early in 2023. As lower interest rates are recognized in Q1 of 2023, we are likely to see more homes on the market, buyers coming back out in droves and the competition to get your offer accepted once again a challenging reality.

A word to the wise; get your ducks in order, so that when the market heats back up, you are ready to pounce on the home of your dreams. PREQUALIFY NOW.