2 Reasons Why Today's Mortgage Rate Trend is Beneficial for Sellers
If you have been putting off selling your home to make a move because you thought mortgage rates were too high, the recent downward trend is great news for you. Mortgage rates have descended since last October when they hit 7.79%. In fact, they’ve been below 7% for over a month now (see graph below):
And, while they are unlikely to return to the 3% we saw during the 'unicorn' years, they are expected to fall further in the near future. As Dean Baker, Senior Economist at the Center for Economic Research, explains:
“It also appears that mortgage rates are now falling again. They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.”
You May Not Feel as Locked-In to Your Current Mortgage Rate
Mortgage rates are already significantly lower than they were a few months ago, so you may feel less locked in to the current mortgage rate on your home. When mortgage rates were higher, moving to a new home meant potentially trading in a low rate for one around 8%.
However, with rates dropping, the difference between your current mortgage rate and the new rate you’d be taking on isn’t as big as it was. That makes moving more affordable than it was just a few months ago. As Lance Lambert, Founder of ResiClub, explains:
“We might be at peak “lock-in effect.” Some move-up or lifestyle sellers might be coming to terms with the fact 3% and 4% mortgage rates aren’t returning anytime soon.”
More Buyers Will Be Coming to the Market
According to data from Bright MLS, the top reason buyers have been waiting to take the plunge into homeownership is high mortgage rates (see graph below):
Lower mortgage rates may allow buyers to save money on their home loans, making the prospect of purchasing a home more appealing and affordable. Now that interest rates have lowered, more buyers are likely to feel prepared to return to the market and make their move. And more buyers mean more demand for your house.
If you have been putting off selling because you did not want to take on a higher mortgage rate or because you thought buyers were not available, the recent drop in mortgage rates may be your cue to act. When you’re ready, let’s connect.