This year has been a drag on the mortgage market as the average interest rate on the most popular long term mortgage – 30 year fixed – is high more than twice as much as a year ago.
What happened: A closer look shows that mortgage rates have been fluctuating and falling throughout 2022. At the low end – on January 13, 2022 – rates were 3.45%. At the high end – October 27, 2022 – rates were 7.08%.
Still, about 4.43 million homes were sold in the US in October.
See also: Why This Mortgage Expert Won’t Fight The Fed
The gap between 3.45% and 7.08% means literally hundreds of dollars in additional monthly costs on a homeowner’s mortgage.
Mortgage rates have fallen for six straight weeks. In December, the 30-year fixed rate fell to 6.27%.
Why it matters: Wondering how much this saves the typical homeowner on monthly mortgage costs? Well, if the October homebuyer waited until December to buy, they would save about $300 on their monthly mortgage payment.
Real estate prices are also falling. However, according to some economists, they still have more room to the downside. The typical US home sold for about $352,000 in the four weeks ended Dec. 18, down 10% from a peak of $391,000 in June and up just 1% year-on-year, as of new data issued from Redfin Corp RDFN.
With falling prices and interest rates, more interested parties are entering the market.
Redfin’s Homebuyer Demand Index, which tracks requests for viewings and other Redfin homebuyer services, rose 6.5% from the previous month, while requests for mortgage purchases rose 4.6%.
The surge in early-stage demand has not resulted in more pending home sales or new listings, according to Redfin economists.
Because the holiday season is traditionally quiet, sales aren’t expected to pick up until mid-January, and new listings may not pick up until the spring.
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