Why Now Could Be the Best Time to Buy or Refinance: Mortgage Rates Hit New Lows in 2024
If you're a Home Buyer who has been sidelined by high mortgage rates, this article is for you! Recent days have brought great news for anyone looking to buy a home or refinance their mortgage – mortgage rates are on the decline! After hovering above 7% for a while, they've now dropped to levels we haven’t seen in months. Let’s break down what this means for you and why it’s happening. Here's what you need to know!
Why Are Mortgage Rates Dropping?
The recent drop in mortgage rates can be traced back to a few key factors, primarily tied to the economy and the job market. Last week’s jobs report showed higher unemployment rates, which led investors to flock to safer investments like U.S. Treasury bonds. When investors buy more Treasury bonds, the yields on these bonds drop. Since mortgage rates are closely linked to the yields on 10-year Treasury bonds, we see a corresponding drop in mortgage rates.
As of early August, the average interest rate for a 30-year fixed-rate mortgage fell to about 6.75%. This is a significant decrease from the recent high of 7.52% back in May. For those who took out mortgages at higher rates, now might be a great time to consider refinancing!
What Does This Mean for You?
If you’ve been waiting to buy a home because of high mortgage rates, this dip could be the perfect opportunity. Lower rates mean lower monthly payments, making homeownership more affordable. But don’t wait too long! As mortgage rates drop, more buyers might jump back into the market, increasing competition and potentially driving up home prices.
Greg McBride, Chief Financial Analyst at Bankrate, mentioned that while we shouldn’t expect rates to drop back to the record lows we saw during the pandemic, there’s still a good chance they’ll stay around the 5.5% to 6% range for the next year. So, if you’re thinking about buying or refinancing, now could be a smart time to act.
What's Next for Mortgage Rates?
The Federal Reserve plays a big role in this whole scenario. While they don’t directly set mortgage rates, their policies impact them. Recently, the Fed decided to keep their key benchmark rate unchanged, but there’s talk of a possible rate cut in the near future if economic conditions continue to soften. The next key date to watch is mid-September when the Fed meets again. If inflation continues to slow and unemployment stays high, we might see another rate cut, which could push mortgage rates even lower.
Bottom Line
Mortgage rates have taken a dip, giving you a golden opportunity if you’ve been waiting to buy a home or refinance your current mortgage. But remember, lower rates can also mean more competition, so acting sooner rather than later might be your best bet.
Ready to make your move? Reach out to your local real estate professional (like me!) to get started. Let’s find you that perfect beach home or help you refinance to save some money!
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