Will declining mortgage rates push up home sales?

Last week the 30-year fixed-rate mortgage dropped to its lowest level in 15 months, representing the single biggest one-week drop so far this year. Softening of mortgage rates, coupled with a recent increase in the number of local real estate listings, creates a welcome opportunity for prospective home buyers; their selection and buying power are both suddenly enhanced.  

On August 8th, mortgage buyer Freddie Mac reported that the 30-year fixed rate had fallen to 6.47%, from 6.73% the previous week. It was the second straight weekly rate drop. The borrowing cost on 15-year fixed-rate mortgages also fell, from 6.34% a year ago to 5.63% earlier this month, incentivizing homeowners to think about refinancing. According to the Mortgage Bankers Association’s refinance index, refinance applications were up almost 60% from the same week in 2023.   

Elevated mortgage rates have discouraged home shoppers across the nation in a housing slowdown that’s entering its third year. Recently the average rate for a 30-year mortgage has sat around 7%, which is more than double the average rate in 2021. The recent fall in rates is a sign of easing inflation and a cooling job market. If these trends persist, we can expect more refinance applications and higher refinance mortgage volumes. And if mortgage rates continue to drop, we may see more Seattle area homes and condos change hands in the coming months.   

This post was based on information found on  Seattle Times.