If your buyers have been waiting for the “perfect” rate, now might be the time to make your move. Here’s why:
It’s no secret that potential homebuyers have been anxiously waiting for borrowing costs to drop. But just how much relief should we expect when it comes to mortgage rates and the Federal Reserve’s rate cuts?
Here’s what’s been happening: Back in early November of last year, we saw the national average rate on a 30-year fixed-rate mortgage peak at about 7.8%. That’s a hefty number! But, thanks to some movement in the market, that rate has dropped by more than 170 basis points, bringing us down to a more manageable 6.1% according to the Mortgage Bankers Association.
Now, let’s break that down in real terms. If you’re looking at a $400,000 loan, that drop in rates could lower your monthly payment from around $2,879 to $2,424. That’s a savings of roughly $455 each month—about 17%! That’s not just pocket change; it’s the kind of savings that can make homeownership feel much more attainable.
But, and it’s a big but, the drop in mortgage costs isn’t just about the Fed slashing rates. What’s really been driving these lower mortgage rates is the decline in Treasury yields, not necessarily the Fed’s moves. Here’s the thing: mortgage rates don’t always follow the Fed’s decisions like a shadow. In fact, they’re more closely tied to Treasury rates, especially the 10-year Treasury.
So, what does this all mean for buyers waiting for the Fed’s next move?
Well, while we alongside our friends at Ameriprise do believe that 10-year Treasury rates might pull mortgage rates down a bit further in the coming months, don’t expect any dramatic shifts. A lot of the correction has already happened. As it stands, the Ameriprise Global Asset Allocation Committee forecasts that the 10-year Treasury yield will hover around 3.75% by the end of the year, which is pretty close to where it’s at now.
So, as you’re working with hesitant homebuyers, share these stats with them and help them understand there’s a very good chance that the mortgage rates you see now won’t drastically change anytime soon. While there might be some modest relief, we’re likely near the bottom of the correction. So, if your buyers have been waiting for the “perfect” rate, now might be the time to make your move.
