Mortgage rates held relatively steady this week, with the average 30-year fixed-rate mortgage at 6.65%, according to Freddie Mac. The rate is down slightly from 6.67% last week, but it remains well above the 6% level that some economists say could help reignite housing market activity.
Many buyers appear to be perceiving mortgage rates as too high. Mortgage applications for home purchases dropped 2% in the latest week and are 3% lower than a year ago. Also, existing-home sales and pending home sales both declined last month as affordability concerns continue to weigh on buyers.
“There’s no doubt that the housing market would be thriving if average mortgage rates were to return near 6%,” Lawrence Yun, chief economist at the National Association of REALTORS®, recently said. But waiting for lower rates could mean buyers miss opportunities in today’s slower-paced housing market, real estate pros say.
Related: Rising Costs Are Weighing on Home Sales This Summer
Where Buyers May Find Leverage
Buyers in the market are finding ways to offset the higher borrowing costs. Sellers are increasingly showing willingness to negotiate, giving buyers more leverage than they had during the frenzied housing markets of recent years, says Michelle Price, a real estate professional with Michelle Price Realty Group in Westlake Village, Calif.
“We’re seeing credit and repair requests we just didn’t see before,” she says. Some sellers reportedly are also offering closing-cost assistance or mortgage-rate buydowns.
Further, Realtor.com found that sellers reduced prices on 20% of active listings in July.
Meanwhile, waiting for lower rates can be a gamble, says Alex Rodino, a real estate pro with Keller Williams Coastal Area Partners in Savannah, Ga.
“If the right home is affordable today and the numbers work under conservative assumptions, that is a stronger position than waiting for a perfect rate that may or may not arrive,” Rodino says. “If rates improve later, refinancing may be an option. But if rates drop and buyer demand surges, that same buyer may face higher prices and more competition.”
Rodino says buyers who remain prepared while others sit on the sidelines can gain leverage, including more room to negotiate seller concessions and less pressure to compete in bidding wars. “The goal is not to force a purchase,” he says. “The goal is to identify where the market gives you leverage and use that leverage to create a safer deal.”
Related: 6 Ways Your Buyers Can Save on Their Mortgage
Mortgage Rates This Week
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 20:
- 30-year fixed-rate mortgages: averaged 6.65% this week, down from last week’s 6.67% rate. A year ago, rates averaged 6.58%.
- 15-year fixed-rate mortgages: averaged 5.95% this week, down slightly from last week’s 5.96% average. Last year at this time, 15-year rates averaged 5.69%.
