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Markets are still seeing shifts in the wake of Federal Reserve Chairman Ben Bernanke’s mid-June announcement that the Fed would slow its bond-buying program contingent on the strength of the U.S. economic recovery.
By the end of the month, mortgage rates for a 30-year, fixed mortgage had jumped to 4.5 percent, up from about 3.9 percent on June 1. The last week of June also posted the largest weekly increase in mortgage rates in more than 25 years, according to mortgage finance company Freddie Mac.
We previously reported that this shouldn’t scare potential homebuyers out of the market, and the same holds true now. According to a release from Zillow Mortgage Marketplace this week, the 30-year fixed mortgage rate dropped from 4.41 percent to 4.26 percent in the past week.
According to Erin Lantz, the Director of Zillow Mortgage Marketplace, the last time that rates have been this high was two years ago, but this week’s decline indicates markets are stabilizing.
“Compared to the last few weeks, rates are fairly stable,” she said. “Generally we expected rates to rise to 4.5 to 5 percent over the coming 12 to 18 months. We were a bit surprised by the speed at which they rose, when they rose pretty quickly from mid-May to mid-June, but I think what we’ve seen since then is a bit of stabilization.”
While experts are still predicting that increase over the next year, Lantz stressed that it’s important to remember that the historic lows seen in mortgage rates during the past few years was spurred by government intervention in the housing crisis, saying “hopefully we don’t return to a point that would warrant intense stimulation of housing demands.”
And although it’s difficult to predict rates in advance, Lantz recommends that buyers not only continue to shop for a home in a timeframe that works for them, but to actively compare different offers. She advises that consumers “not make rates the driving factor” in their decision, but instead, to continue to compare offers because rates vary among lenders, and that a small reduction in rate could save homeowners thousands of dollars over the life of the loan.
Image: iStockphoto
December 13, 2023
Mortgages