Two Reasons Why Today’s Mortgage Trend Is Good For Sellers

The recent decline in mortgage rates brings encouraging news for those contemplating selling their homes and making a move. If you’ve hesitated due to concerns about high mortgage rates, the trend over the past few months may alleviate those worries. Since October, rates have steadily decreased from a peak of 7.79%, and for the past month, they have consistently remained below 7%. This favorable shift in mortgage rates could present an opportune moment for prospective sellers to consider entering the housing market with improved affordability and potentially attracting more buyers.

Mortgage Rates Continue To Hover In The Mid 6% Range:

Although mortgage rates may not return to the exceptionally low levels of the ‘unicorn’ years around 3%, there is optimism that they will continue to decrease from their current levels in the near future. Dean Baker, a Senior Economist at the Center for Economic Research, provides insights into this expectation. The anticipation of further declines in mortgage rates suggests a potentially more favorable environment for individuals considering real estate transactions. This evolving trend could influence market dynamics, making homeownership and property investments more accessible for a broader range of individuals.

“It also appears that mortgage rates are now falling again. They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.”

The recent downward trend in mortgage rates brings about two compelling reasons why this development is advantageous for you. Firstly, the lowered mortgage rates offer a sense of flexibility, diminishing the feeling of being locked into your current mortgage rate. Just a few months ago, contemplating a move meant potentially trading in a low rate for one nearing 8% when rates were higher. However, with the recent decline, the gap between your existing mortgage rate and the new rate you’d be acquiring is not as substantial. This makes the prospect of moving more affordable than it was in the recent past. Lance Lambert, Founder of ResiClub, underscores this by highlighting the improved affordability facilitated by the narrowing difference in mortgage rates.

“We might be at peak “lock-in effect.” Some move-up or lifestyle sellers might be coming to terms with the fact 3% and 4%              mortgage rates aren’t returning anytime soon.”The recent drop in mortgage rates is poised to attract more buyers to the real estate market. Data from Bright MLS indicates that high mortgage rates have been a significant deterrent for potential homebuyers, serving as the primary reason for their hesitation to enter homeownership (refer to the accompanying graph). With rates now on a downward trajectory, this key barrier is gradually being lifted. The more favorable mortgage rate environment is expected to motivate a larger pool of buyers to overcome their reservations and actively participate in the housing market. This influx of buyers could contribute to increased demand, potentially creating a more dynamic and competitive landscape for real estate transactions.

Top Three Reasons Buyers Paused Decision:

The decline in mortgage rates not only enhances affordability for potential buyers but also makes purchasing a home more enticing. With lower mortgage rates, buyers have the opportunity to save money on their home loans, which can significantly impact the overall cost of homeownership. As rates continue to ease, more buyers are likely to perceive the market as favorable, prompting them to reenter and make their move. The increased buyer activity translates to heightened demand in the housing market, potentially benefiting sellers. In this scenario, there is a positive correlation between lower mortgage rates, increased buyer confidence, and a potential uptick in demand for houses, creating a more vibrant and dynamic real estate environment.

The Bottom Line

For those who have been hesitant to sell due to concerns about taking on a higher mortgage rate or the perceived absence of buyers, the recent decline in mortgage rates could serve as a clear signal that it’s an opportune time to make your move. The improved affordability and the potential increase in buyer activity create a favorable environment for sellers. If you find yourself ready to take advantage of these market conditions, connecting with a local real estate agent can be a valuable step. A real estate professional can provide insights into the current market dynamics, guide you through the selling process, and help you make informed decisions to maximize the potential benefits of selling your home in the current real estate landscape.