Mortgage Rates Drop

Mortgage rates have fallen to the lowest level in almost a year. A 30-year fixed rate mortgage is currently at 6.75%.

The FED held their rate steady during their last meeting at the end of July, However, expectations are that they may move to lower their rate during the upcoming meeting in September 2024. The recent dip in stock market activity, driven by lower than expected job numbers has many investors calling for a more immediate rate cut.

All indicators show economic activity continuing at a strong pace. At the same time, job numbers have cooled, while the unemployment rate moved up slightly. Over the last year, inflation eased and is nearing the Fed’s goal rate of 2%.

If the stock market doesn’t bounce back, many expect mortgage rates to come down to ward off a recession. Currently, buyers face several challenges that include high mortgage rates, and a lack of affordable homes driven by reduced inventory.

A small change in mortgage rates increases how much house a person can afford. This is because they can qualify for a higher purchase price at a lower monthly payment.

NAR Chief Economist Lawrence Yun believes that rates could fall even lower in the coming weeks. The 10-year bond yield recently dropped to 3.8% from 4.8% just a few months ago. He thinks that if this 1 percentage-point decline was mirrored in lower mortgage rates, it would mean borrowers would need $300 less for the monthly payment on a typical home loan. 

“Mortgage rates declined to their lowest level since early February,” said Sam Khater, Freddie Mac’s Chief Economist. “Expectations of a Fed rate cut coupled with signs of cooling inflation bode well for the market, but apprehension in consumer confidence may prevent an immediate uptick as affordability challenges remain top of mind. Despite this, a recent moderation in home price growth and increases in housing inventory are a welcoming sign for potential homebuyers.”

Rates were at an all time high at the end of 2023. While rates have fallen slightly a few times over the last year, they represent ‘false starts’ to lower rates because the rates moved back up. It may be that cooling economic data will be enough to maintain a downward trend in mortgage rates.

If you were pre-approved for a loan amount over the last year, it would be wise to run the numbers again. It may be that your monthly payment, based on the lower rate, will allow you to qualify for a higher purchase price.

Contact us today for more information about the real estate market in Lake Tahoe and Truckee.