It seems clear mortgage interest rates have hit a peak in late October and are now headed south. Mortgage interest rates dropped again to 7.22% from 7.29% last week. That drop from the recent October 26 peak of 7.79% translates into a $125-a-month savings on a $400,000 home, which is significant for many home buyers who may be able to use the savings to cover a monthly utility bill or commuting costs.
The drop in mortgage interest rates comes during a time often best for first-time home buyers in a low inventory environment. First-time buyers may have more success with a multiple-offer situation without the intense competition of spring and early summer. Especially now since housing inventory remains tight and even lower mortgage interest rates are expected this spring.
The Fed should have strong motivation to keep the Fed Funds Rates as is and consider cutting it as inflation continues to moderate. This will mean even lower mortgage interest rates in 2024.