New Homes dot the landscape in Middlesex Township, Pa., on Thursday, Apr. 19, 2023. Long-term mortgage rates have mostly edged lower in recent weeks, welcome news for prospective homebuyers looking for some relief after years of soaring home values. – The average rate on a long-term U.S. home loan is down to the lowest level in five weeks, welcome news for house hunters facing a market constrained by persistently high prices and a near-historic low number of homes for sale.
“This week’s decrease continues a recent sideways trend in mortgage rates, which is a welcome departure from the record increases of last year,” said Sam Khater, Freddie Mac’s chief economist. “While inflation remains elevated, its rate of growth has moderated and is expected to decelerate over the remainder of 2023. This should bode well for the trajectory of mortgage rates over the long-term.”
“I thought, before go any higher, I might as well jump in and try to find a place,” said Cafarella, 55. One way buyers have dealt with higher rates over the past year is with a mortgage rate buydown, which lowers the rate on a home loan for a few years or for the life of the loan, thereby reducing a homebuyer’s overall borrowing costs. In exchange, buyers pay fees as part of their closing costs to cover the rate buydown.
Many homeowners who locked in a mortgage rate in 2020 and 2021, when rates averaged below 3%, are reluctant to sell now that rates have since doubled, which is limiting the inventory of homes on the market. The number of homes for sale has yet to return to pre-pandemic levels, with roughly 1.63 million homes listed for sale in the first quarter, down 40% from the first three months of 2019, according to the NAR.
Many prospective homebuyers have been pushed to the sidelines during the past year as the Federal Reserve cranked up its main borrowing rate in a bid to tamp down persistent, four-decade high inflation.a key barometer of inflation, rose 4.9% in the 12 months ended in April. That’s down significantly since peaking at 9.1% in June, but remains well above the Fed’s target level.