This article¹ from Builder Online states that now is a good time to purchase a home due to the recent drop in mortgage rates. Mortgage rates were around 7.5% in April and are currently at 6.85%, creating approximately $22,500 of purchasing power for buyers. CCM tracks mortgage rates and mortgage purchase applications, noting that even a minimal drop in mortgage rates causes a spike in applications. This shows that there is pent-up demand from homebuyers who are trying to time mortgage rates for a good deal or need a specific rate to qualify for their desired home price.
Separately, the futures market² is currently predicting a 90% chance that the Fed cuts short-term rates by 0.25% at their September meeting, a 62% chance of an additional 0.25% cut in November, and a 51% chance of a further 0.25% cut in December. The Fed doesn’t set mortgage rates directly, but their actions impact expectations about future inflation. Shifting expectations to low inflation definitely lowers mortgage rates.
Source:
- Builder Staff. (2024, July 15). Lower Mortgage Rates, Better Purchasing Power. Builder Online.
- CME FedWatch.
