Recent action from The Federal Reserve triggered falling interest rates. So, how did this action impact the housing market right now? The recent rate cut offers hope for homebuyers and those looking to refinance.
Although the Fed doesn’t directly set mortgage rates, its actions influence them. As a result, rates have already declined in anticipation of the Fed’s policy shift.
Mortgage rates rose significantly in 2021, reaching a 23-year high of 7.8% last October. Since July, rates have been declining. The current average 30-year mortgage rate now at 6.09%, down from 7.22% in May, according to Freddie Mac.
Even a modest rate drop can translate into long-term savings. For example, a buyer of a median-priced home ($416,700) could save about $312 per month compared to rates from a few months ago. However, with home prices remaining high, a 6% rate still isn’t affordable for many.
Falling Interest Rates: How low will they go?
Experts predict that mortgage rates will remain near current levels this year, with Fannie Mae projecting an average rate of 6.2% in the fourth quarter of 2024. While factors like economic data and the bond market impact rates, a significant drop to pre-pandemic lows isn’t expected anytime soon.
Buy Now or Wait? Many buyers are waiting for rates to fall below 6%, but this may lead to more competition if rates do drop. Real estate professionals suggest that those ready to buy should consider acting now, as the current market offers more inventory and slightly more favorable rates.
Refinancing applications have also surged. Many lenders offer incentives like “no-refi rate drops” to help homeowners lower their rates when the market improves. This could be a smart option for those currently locked into higher rates.
Experts say prospective buyers and refinancers should remain realistic about future trends. Taking advantage of the current market might be the best move before conditions shift again.
Let’s Make Home The Goal
In addition to the Falling Interest Rates, The U.S. Department of Housing and Urban Development (HUD) announced new efforts to expand housing counseling services and improve access to homeownership. These efforts will target first-time buyers and communities historically excluded from the process. In a major move, HUD has partnered with Zillow to raise awareness and attract a new generation of homebuyers.
This partnership is part of HUD’s “Let’s Make Home the Goal” campaign, which aims to highlight the benefits of HUD-certified housing counseling services. The campaign has already reached nearly 5 million potential homebuyers, and with Zillow’s support, it aims to engage over 8 million more across 42 media markets.
Ever day, HUD’s counselors provide critical advice on buying a home, avoiding foreclosure, and maintaining affordable housing.”
Adrianne Todman, Acting HUD Secretary
As part of this initiative, HUD also introduced a new rule to modernize housing counseling services. The rule goes into effect on October 16, 2024. It is expected to make it easier and more cost-effective for agencies to support clients.
By expanding access to these essential services, HUD continues its commitment to bridging the homeownership gap and empowering more Americans to achieve housing stability.
