Mortgage rates continued their downward trek this week. According to Freddie Mac, the rate on a 30-year fixed mortgage dropped to 6.15% from 6.33% the previous week. With inflation declining and the Fed switching to a smaller rate hike, mortgage rates may drop even further in the upcoming weeks.
The fall in mortgage rates creates opportunities for many buyers. A lower mortgage rate brings down the monthly payment. Since rates’ recent peak in the middle of November, buyers can save about $300 every month with rates near 6%.
At the same time, data shows that sellers are more willing to negotiate as homes stay on the market longer. Sellers had to reduce their initial asking price by 12% on average for sold properties listed for more than 30 days. Price cuts reached 15% when properties stayed on the market for more than 4 months. In the meantime, there are fewer offers per listing. The typical seller receives a couple of offers for their home compared to 4 offers the previous year when buyers were rushing to benefit from the 3% historic low rates.
However, buyers are still dealing with weak affordability and low inventory. Buyers earning $100,000 can currently afford to buy a home with a price of up to $380,000. But only 40% of the listings are in their price range. A year ago, these same buyers could afford to buy a home that was $130,000 more expensive.