In a significant turnaround from October’s 23-year high of 8%, Mortgage Rates Ease from 23-Year High since July. Some borrowers are now obtaining quotes in the 6% range, marking a noteworthy shift in the real estate landscape.
Larry Steinway, Senior Vice President of Mortgage Lending and Branch Manager at Revolution Mortgage, reported that a top-tier borrower with a 780 FICO score and a 25-30% down payment for a single-family 30-year fixed-rate mortgage was quoted 6.875% on Thursday.
“We are definitely seeing an uptick in demand. There’s been increased activity in the last two weeks [more] than the last two months. When interest rates hovered around 8%, it really hurt affordability,”
noted Steinway.
“It’s too early to tell December figures, but we closed about 5% more transactions last month compared to November 2022. We locked in rates probably 25% more during that same period,”
shared Jon Overfelt, Director of Sales and Principal at American Security Mortgage Corp.
Despite the recent improvement, loan originators stress the need for further rate reductions to witness a substantial impact on buyer activity.
“If rates continue to drop, some LOs expect a small ‘bump’ in cash-out refis, but traditional rate-term refis won’t be likely in the foreseeable future until rates are in the 5% range,”
indicated industry professionals in an interview with HousingWire.
The variation in quoted rates underscores the importance of individual factors such as credit score, down payment, and loan-to-value ratio. Borrowers may not see rates in the 6% range without adjustments like buying points or obtaining pricing exceptions from their lender.HousingWire’s Mortgage Rates Center revealed 30-year conforming rates at 6.998% on Monday, still notably higher than the 6.35% recorded a year ago.
Shane Kidwell, CEO of Dwell Mortgage, highlighted the nuanced perspective on demand, stating,
“If we compare 24 months ago, demand is way off. If I compare two months ago, demand is up. So if you look macro versus micro, you’re going to get a very different picture.”
Loan originators express optimism that mortgage rates will further decline as the gap between 30-year fixed rates and the 10-year Treasury yield narrows. However, buyers remain cautious, waiting to see if rates will continue their recent descent.
“After a fairly strong jobs report on Friday, rates ticked back up. All eyes will be on the CPI report and Fed meeting this week,”
mentioned Robby Oakes, Managing Director at CIMG Residential Mortgage.
In the ever-volatile mortgage market, buyers seek assurance of stable and low rates before committing, emphasizing the importance of an orderly return to normal rates.
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