A housing development in Middlesex, Pa., is shown on Friday, March 29, 2024. Holding out for more attractive mortgage rates could give homebuyers some financial breathing room.Shop for a home now or hold out for the possibility of lower mortgage rates? That question is confronting many home shoppers this spring homebuying season.
Gagan Hegde, a software engineer in Durham, North Carolina, is leaning toward the proactive approach as he looks to buy his first home. The rock-bottom mortgage rates that fueled a buying frenzy in 2021 and early 2022 are long gone. While an average rate on a 30-year home loan of just under 7% is not far from the historical average, that’s little consolation to homebuyers who, prior to the last couple of years, hadn’t seen average rates this high going back nearly two decades.
The Fed has indicated it expects to cut rates this year once it sees more evidence that inflation is slowing from its current level above 3%. How the bond market reacts to the Fed’s interest rate policy, as well as other factors can influence mortgage rates. Current indications are mortgage rates will remain higher for a while longer.For now, the uncertainty in the trajectory of mortgage rates is working in favor of home shoppers like Shelby Rogozhnikov and her husband, Anton.
Real estate agents from Los Angeles to New York say bidding wars are still happening, though not as often as in recent years in some places. “Before we saw sellers could really do what they wanted,” she said. “They didn’t have to contribute at all to the buyer’s purchase. And now that’s kind of flipped. I’m seeing more buyers pushing sellers.”
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