The housing market is something that greatly impacts the economy and so what this article talks about is how mortgage rates have been falling specifically this past week. A year ago the rates were almost 1% higher so it's great for homebuyers and people looking to invest. That being said, just because the interest rate trend is going down, it does not mean it's not a competitive market. I found this article interesting because as someone who wants to be a future homeowner, it's important to look at the interest rates and track when the best time to invest in a home is. After reading this article I was curious to see what previous rates were so I looked up what mortgage rates were in 2018 (pre-pandemic). To my surprise, it was around 3-4% which is a lot lower than it has been in the past few years.
https://www.msn.com/en-us/money/other/mortgage-rates-drop-to-lowest-level-since-may/ar-AA1nbVLD
I did not realize mortgage rates were falling until I read your post. When my parents bought their house in 2014, the typical mortgage rate was around 4%. Considering how large the cost of a home is, I was surprised at the approximately 2.5% gap between what rates were in 2014 and rates now (~6.60%). Do you expect mortgage rates to go back to pre-pandemic levels eventually, or do you think the pandemic will have a permanent impact on rates (making them stay in the 5-6% range)?
ReplyDeleteDespite rate hikes by the Fed, it is interesting to note that mortgage rates have come down. The lower rates are definitely good news for new home buyers, but they face depleted inventory challenges, so housing prices remain elevated. This imbalance between supply and demand will continue to challenge new home buyers since prices will be high.
ReplyDeleteWhile yes, interest rates are high and spiking, something to consider as a homeowner is refinancing a home to decrease the rates. I recently learned of this from my father and in general, it is acceptable to refinance when a reduction of 2% in rates are expected. The lower interest rates on home loan benefit the consumer and can increase the standard of living by a fair amount.
DeleteThe lower rates are great news for the housing business, especially for new homeowners like the millennial generation. Another plus to the lower interest rate is you could refinance your home and get a lower rate on your mortgage to make payments cheaper.
ReplyDeleteIn reading the article, I was actually really interested in this because for most of my life I have not had to think about the housing market. For the bottom line, even though the mortgage rates may be lower the article does a good job at covering what else may happen in this situation. Because most consumers are “attracted by lower rates” this will essentially deplete available housing for sale and increase demand which shifts the aggregate demand curve to the right keeping prices elevated. I think your extra research into other past mortgage rates adds to the discussion because it shows how much the economy has changed in the past 6 years on top of just looking at the rate year by year. I can imagine that the market was probably just as competitive, if not more, when the mortgage rates were that low.
ReplyDeleteIt would be great for this trend to to keep. This goes back to the blog I wrote about, regarding how people are unhappy with the economy, and I think the housing market has a lot to do with this. Hopefully this trend keeps.
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