Rates have remained relatively stable since December, with the average 30-year mortgage rate posting a modest decline in the first week of February.
The average 30-year mortgage rate retreated to 6.63%, falling just below the four-week average of 6.65%. Rates have been remarkably stable after more than a year of volatility, remaining in the 6.6% range for seven straight weeks. The 15-year rate was largely unchanged at 5.94%.
Applications fell despite dip in rates.
While the recent stability in mortgage rates may be providing some much-needed relief for buyers, mortgage applications fell 7.2% in the latest Mortgage Bankers Association survey, ending a three week trend of increasing application activity.
The decline could indicate that many buyers are still hesitant, or simply unable, to dip their toes back into the market due to low inventory. The MBA also noted that the average 30-year rate for FHA loans, which are often used by first-time buyers, increased from 6.51% to 6.61% in the past week.
“Low existing housing supply is limiting options for prospective buyers and is keeping home-price growth elevated, resulting in a one-two punch that continues to constrain home purchase activity,” said MBA Vice President and Deputy Chief Economist Joel Kan, adding that the average loan size for purchase applications is now over $444,000 — the highest level since May 2022.
Still, buyers wanting to make a home purchase this year shouldn’t wait for rates to fall further, says Bright MLS Chief Economist Dr. Lisa Sturtevant, especially as prices continue to rise.
“If a homebuyer finds a home they love — in their price range — it is probably smart to act because homes are still going to sell quickly this year,” Sturtevant said.
The Fed leaves rates unchanged for now, but cuts expected.
As mortgages stabilize, the Fed has expressed that it is also leaving rates alone for the time being — but continues to leave the door open for cuts this year.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” members of the Federal Reserve said on Jan. 31.
Exactly when the committee will feel that “confidence” is unknown, but many economists believe there could be a change in monetary policy at some point in the near future.
“The Fed has made progress in bringing inflation back toward its 2% target, and many of its members project that policy rate cuts may be appropriate at some point in 2024,” Realtor.com Economist Jiayi Xu said of the latest Fed news.
Those cuts could come relatively soon, said Sturtevant, noting that “there is anticipation that the Fed will begin to cut rates this spring.”
The National Association of Realtors expects mortgage rates to stay around 6%, but predicts multiple rate cuts this year. NAR Deputy Chief Economist and Vice President of Research Jessica Lautz said today, “The Federal Reserve is expected to cut the Fed Funds rate at least four times throughout 2024, which will put pressure on mortgage interest rates to lower.”
Source: Mortgage rates dip slightly as Fed continues its pause (realestatenews.com)
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