Buoyed by good news showing that our overheated economy is finally cooling, and inflation lowering, conventional rates have dropped down to 7.37% as of Friday, the 17th of November, per Mortgage News Daily. Better yet, FHA and VA rates are at or near 6.7% while a 15-year amortized mortgage is at 6.75%.
Though not spectacularly low, we expect buyer activity will pick up. This does not mean prices will immediately drop. Buyers will, for the short term, still be in the driver’s seat. We expect that sellers will (and should) provide buyers with concessions to assist them with more affordable rates. How much in concessions you ask? Cromford reports that so far in November, the median dollar amount of concessions is up 33% to $9,900 from the month before for those transactions that had concessions. Even though FHA and VA are in the 6.7% range, that is still VERY expensive for many or most buyers.
If rates will go lower, should they therefore wait to buy? Not a bad choice if you’ve got the crystal ball that no one else seems to have.
The big question of course is which direction rates will go? Up until now the economy has strongly rebuffed the Fed’s continual rate increases. The Phoenix economy remains quite strong, and our shelter costs (home ownership and renting), though abating some, are still much higher than two years ago – when rates were in the 3’s and prices much lower.
Buyers, I know what you’re thinking. If rates will go lower, should they therefore wait to buy? Not a bad choice if you’ve got the crystal ball that no one else seems to have. I recall friends and clients of mine (and myself) refinancing 2 and 3 times when rates were continuously dropping in years past.
Here’s my advice, and readers of our Snapshot have heard this before: Start or keep looking for your home. IF you find THE house that checks most all the boxes where you can see yourself enjoying living – and you can afford it, go for it. If rates drop a lot, refi. If rates hold pat or increase, you made a wise choice.