Mortgage rates in the US have declined for the second consecutive week due to progress on inflation. The average interest rate on a 30-year fixed-rate mortgage fell to 6.35% from 6.39% the previous week. Click here to find out where your personal interest rate will fall. This decrease continues a recent sideways trend in mortgage rates, which is a welcome departure from the record increases of last year. Mortgage rates topped 5% for the first time since 2011 a little over a year ago and have remained over 5% for all but one week during the past year.
Inflation is expected to decelerate over the remainder of 2023, which should bode well for the trajectory of mortgage rates over the long term. The rate for a fixed-rate 30-year loan held relatively steady at the lower end of the 6% range this week because the inflation picture is showing expected improvement. However, home sellers are still “locked-in” due to high mortgage rates, causing housing supply to remain low — in order to entice a homeowner to sell, they have to be excited about the potential home they will buy, along with the interest rate. Sellers are also facing another issue caused by high inflation: the increasing costs of home improvements prior to selling.
Buyers are responding positively when rates tick down, and both refinance and purchase applications saw strong gains last week, according to the Mortgage Bankers Association. Real estate agents and homeowners in most of California are still experiencing bidding wars for properties, despite an overall decrease in the number of sales. There are more buyers than sellers, causing the number of homes for sale to dictate the number of sales. It’s a tough market, but we can help.
Agents in many markets are complaining of a lack of available inventory, leading to bidding wars that are pricing some potential buyers out of the market. As always in California, some houses are being listed intentionally low, exacerbating the demand for the property and causing potential buyers to have to bid higher than they might otherwise have done. Homeowners are reluctant to sell due to high interest rates, and the inventory of new homes coming to the market is down by more than 20% YoY.