06/4/24

3 things to know about mortgage rates this summer

Happy National Homeownership Month! While we’ll have an entire blog devoted to reasons to celebrate the joys of owning a home soon, this piece is on a topic all of us know well. Yes, we’re talking about interest rates.

Five months into 2024, it’s fair to say those who predicted multiple interest rate cuts from the Federal Reserve and quickly decreasing mortgage rates were wrong. However, mortgage rates remain on the brains of almost every buyer and seller out there, so it’s important to know the latest when it comes to this subject. With that in mind, here are three points we think are key for the time being.  

A federal rate cut is not likely to come anytime soon. At the start of the year, many experts forecasted that up to three separate rate cuts from the Federal Reserve were coming. None have happened so far, and no changes are expected this summer either.

While this is disappointing for our buyers and sellers, as real estate professionals, it’s most important that we are transparent and knowledgeable for those who are relying on us. As you’ll see though, this development doesn’t mean people should stop checking mortgage rates – which is separate but related – to the one set by the Fed.

Mortgage rates are still fluctuating. Even though the Fed has kept its interest rate the same this year, mortgage rates have still bounced around, both above and below the 7% mark. Those shifts don’t seem like much, but if you’re a buyer who has the leeway to “time the market,” those tenths of a point add up. Why? Because even half of a percentage point matters a whole lot. Take this example using the median price of a home ($524,870) in Portland, OR to heart.

“At a 7% mortgage rate, your monthly payment would be $2,794. At 6.5%, it’s $2,654, or $140 less each month. Over 30 years, the difference would save you $50,238 in interest.” Conversely, if your monthly payment could stay at the $2,794 level, you could spend $22,145 more on a home now without increasing your monthly payment.

Refinancing can still be a future option. For a while now, everyone in real estate has talked about how through refinancing, a high mortgage rate can be temporary. Remember the “Date the rate. Marry the house,” phrase? Just how many interested people are out there? According to a September 2023 survey from U.S. News & World Report, 84% of people who bought in that last year planned to refinance, with a majority of people hoping to do so once rates fell below 6%.

As title and closing professionals, our teams take pride in providing clarity and guidance whenever our customers need it – both at the closing table and well before it. By keeping a close watch on market trends and news, all of us in real estate can help our buyers and sellers make informed decisions that best suit their situation and goals. Reach out to us anytime.  

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