Mortgage Rates are on a Roller Coaster Ride

According to data released by Freddie Mac, mortgage rates continue their bumpy ride amidst growing economic uncertainty. This week brought a dramatic dip, with the average rate on a 30-year fixed rate mortgage dropping below 5%, the first time since early April.

Lower rates have not pulled people back into the housing market in any significant numbers. Despite the dip in mortgage rates, data on new purchase contract activity indicate that many buyers are remaining on the sidelines. Mortgage applications have inched up slightly. But other data, including data on showings and public views of properties, indicate that buyer activity remains restrained, despite the lower movement on rates.

The overall housing market is resetting to a new equilibrium. While mortgage rates will always be a consideration for buyers, other factors drive the decision to buy a home. High inflation continues to take a bite out of families’ budgets, making it harder to save for a down payment. Credit card balances are on the rise, impacting debt-to-income ratios. And general economic uncertainty and pandemic fatigue have caused many people to pause their home search.

Mortgage rates will likely continue to fluctuate in the near term. The Fed will raise short-term rates again in the coming months to attempt to bring inflation under control. The impact on mortgage rates will depend on how successful the Fed is in bringing down inflation without triggering a slowdown in the labor market.

To stay informed about housing market conditions, be sure to make use of Bright’s housing market reports and get a preview of future buyer activity by tracking the Bright MLS T3 Home Demand Index for the Philadelphia, Baltimore, and Washington DC regions.

 

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Dr. Lisa Sturtevant serves Bright MLS as the nation’s only MLS-focused economist. She leads research, reporting and insights from Bright’s comprehensive array of real estate data. In 2021, Bright’s over 100,000 subscribers facilitated $142B in real estate transactions through its system stretching across 6 states and the District of Columbia.