Mortgage Rates Are Falling, and Homebuyers Are Responding
The Federal Reserve just raised its benchmark interest rate for the ninth consecutive time, but mortgage rates are falling, and as a result, homebuyer demand is rising
March 27, 2023
Image: Andrey Popov / Stock.adobe.com
The Federal Reserve increased its benchmark interest rate for the ninth consecutive time last week, sending the 30-year fixed-rate mortgage to an average 6.42%, down from the previous week’s 6.6% average, the National Association of Realtors reports. That slight improvement in housing affordability is motivating hesitant buyers to jump back into the for-sale market ahead of the spring buying season. Mortgage applications to purchase a home rose 2% week over week, according to Freddie Mac.
“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” says NAR Chief Economist Lawrence Yun. Home prices also are stabilizing, as Yun has previously predicted, actually falling last month for the first time in more than a decade.
All of this news bodes well for a potentially robust spring real estate season. “If mortgage rates continue to slide over the next few weeks, look for a continued rebound during the first weeks of the spring homebuying season,” says Sam Khater, Freddie Mac’s chief economist.
