Hope for continued rate declines as the spring season gets underway
Mortgage rate conditions improved this week, thanks to falling Treasury rates in light of the recent ceasefire in Iran.
Freddie Mac, in its weekly rate survey released Thursday, said a 30-year fixed-rate mortgage averaged 6.37% this week. That was down 0.09% from the 6.46% average last week.
The average 15-year fixed-rate mortgage also fell this week to 5.74% on average, down from 5.77% last Thursday. The rates reflect the average of loan rates from last Thursday until yesterday.
Sam Khater, Freddie Mac chief economist, said the rate decline is a welcome development for mortgage brokers and customers.
“Mortgage rates ticked down this week, averaging 6.37%,” Khater said. “The decrease in rates represents a positive development for prospective homebuyers and could spark a more favorable spring homebuying season than last year.”
Looking to increase demand
The hope is that rates will continue to slide, as recent home sales have been slumping.
Redfin reported on Thursday that pending home sales in the four weeks ending April 5 showed the greatest decline in three months.
Overall, home sales in those four weeks fell 2.4%. The largest declines were in Providence, RI (-15.5%), Houston (-15.4%), and New York City (-15.3%). The biggest increases were in West Palm Beach, FL (20.9%), San Francisco (16.7%), and San Jose, CA (11.4%).
The typical home that went under contract did so in 51 days nationwide, the longest amount of time for this time of year since 2019.
Sellers in many parts of the country are trying to cut list prices to get their homes to move. Redfin reported a record 34% of February home sellers cut their list price in the month. This is up from 31.5% last year.
Those who cut their price lowered it by an average of $40,915, or 7.3%. This was the highest percentage cut in February since 2023, according to Redfin.
Will rates continue to slide?
There are mixed opinions on whether mortgage rates will continue to fall, but most agree that it will depend on a permanent peace in the Middle East. The current ceasefire caused the 10-year Treasury to drop on Wednesday, bringing down mortgage rates.
Amir Nurani, broker-owner at Left Coast Leaders, isn’t confident that a permanent peace is right around the corner, and he expects rates to go back up if the hostilities pick back up.
“As I'm talking to clients, one of the things I've told clients when this thing started heating up, especially for clients that are thinking about refinancing, is right now you're seeing rates elevated," Nurani told Mortgage Professional America. Once you see resolution overseas, rates will instantly go back down. You’re seeing rates come down right now because we have a pause. The market is optimistic that we are going to see a resolution.
“But in two weeks' time, I don't think we're going to see that resolution. I think what you're going to see with mortgage rates is, over the next week, you will see them start to creep back up, if news doesn't come out that talks are going in the right direction.”
He believes that brokers should encourage hesitant buyers to take advantage of these lower rates, as they may not last long.
“I think if somebody was on the sideline, it makes sense to pull the trigger right now,” he said. “Because this conflict could last for much longer than anticipated, not because we want that to happen, but because that's just the nature of the beast.”
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