Mortgage rates continued their steady decline as the 30-year mortgage slipped to nearly 7%, but buyers are feeling less enthusiastic, according to Freddie Mac.
Rates could reach 6% territory by next year
Mortgage rates are expected to continue downward if the Federal Reserve holds steady with its monetary policy. The Fed has raised interest rates 11 times since March of last year, pushing the federal funds rate to a 22-year high of 5.25% to 5.5% to slow the economy and lower soaring inflation. In October, inflation rose 3.2%, down from 3.7% growth last month – evidence that rising prices are moderating.
With mortgage rates finally decreasing, affordability will likely return to the market, enticing some buyers back. Next year, the typical monthly purchase cost for the median-priced home listing is expected to be slightly less than $2,200 monthly, down from $2,240 this year.
Wrong time to buy a home
A record 86% of Americans think now is a bad time to buy a home, according to Fannie Mae's recent Home Purchase Sentiment Index (HPSI). Survey respondents cited high home prices and mortgage rates as the primary reasons why it's the wrong time to buy.
The HPSI decreased by 0.6 points in November to 64.9, remaining within the range of the low-level plateau it reached in the first half of 2023.
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