Mortgage interest rates have been down over the past week, marking the fifth straight week of rates decreasing. This decline is promising for prospective homebuyers who need to buy now rather than wait for more significant drops, though interest rates lowering more will depend on Federal Reserve decisions and other economic factors, most of which are unstable and unpredictable in these times.
The 30-year fixed mortgage rate is 7.09% for the week ending December 3, 2023, according to data from Mortgage News Daily. This represents a decrease of -0.23% from a week ago.
However, high interest rates are sticking around as central banks around the world, including the Fed, battle stubbornly high inflation with a series of aggressive interest rate hikes. These efforts to rein in prices have also slowed global economic growth and fueled recession fears.
Geopolitical tensions stemming from the ongoing war in Ukraine and conflict in the Middle East have further clouded the economic outlook.
As the Fed asserts that more rate hikes are likely needed to tame inflation, analysts expect mortgage rates to continue trending upward in the near term. This could place even more affordability pressure on the housing market, especially impacting first-time homebuyers.
If purchasing a home is a near-future need and slightly lower rates are perceived to be temporary, it’s obviously a good time to buy a home. If they can wait, they may be able to borrow at lower rates without having to plan on refinancing to soften the blow of hefty monthly payments, but it could be a very long wait, probably years.
Home sellers also may have to wait, but if they need to sell soon, they may need to offer incentives like significant price reductions (which are starting to happen in a growing number of markets and getting much larger than in years), transactions on terms ( Deals on Terms like lease-options and seller financing, to mention a couple), or they can physically improve the homes before putting the home on the market for sale, but last minute improvements can prove very costly and risky, as the costs would probably not be rewarded in full, with no guarantee of a sale.