For the second day in a row, the average 30-year fixed-rate mortgage has been just under 6%, Mortgage News Daily reported on Wednesday. For potential homebuyers who have been waiting for rates to drop, that’s good news.
But these rates are pretty close to historical averages, said Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association.
“Higher than they were in the last decade, but still lower… than where they were in ’22 and ‘23,” Kan said.
Mortgage rates have already come down a lot over the past year, said Chen Zhao, head of economics research at Redfin.
“The reason why we’re seeing lower mortgage rates in the first place is because the economy has gotten weaker,” Zhao said.
The economy has also gotten more uncertain. Usually, when mortgage rates come down, Zhao said demand increases.
“What can happen is that if you do get more demand, that means that home prices can start to go up at the same time,” she said.
But this time, Zhao said, might be different. “The same forces that are bringing down mortgage rates are causing demand to also falter in the housing market.”
Buyers could come back if the economy strengthens this year with tax cuts and if the labor market stabilizes, she said.
For those buyers, Orphe Divounguy, senior economist at Zillow, said there’s some good news.
“Bargaining power has kind of shifted a little bit in favor of buyers over the past year and so that ought to really support potential home buyers who had kind of been sidelined,” Divounguy said.
Especially, he said, buyers who were outbid during the pandemic or got stuck when rates jumped to more than 7%.
