Are the current U.S. mortgage rates changing how prospective buyers could lock down a home this spring?
Nick Bailey, RE/MAX President and CEO, joined Fox Business show “The Claman Countdown” to provide clarity on the current relationship between mortgage rates and homeownership opportunity.
After show host Liz Claman referenced that the average 30-year fixed rate loan is currently a full percentage point higher than it was a year ago, Bailey explained the reality of rate fluctuation in a rebalancing market.
“Interest rates are bouncing up and down and they will probably continue to do so,” he said. “We know what’s happening with short term interest rates and the Federal Reserve trying to cool inflation, but we always have to keep in mind that mortgage rates are based on the 10-year treasury, and that can fluctuate at a different rate than the short term.
What it means to buyers is that rates are going to bounce around… [the rates] have been [fluctuating] over the last couple of quarters, and we believe they will continue to as the year progresses.”
Bailey noted how discussion typically focuses on the 30-year fixed rate, and suggested buyers should weigh all applicable lending options available to them, like an adjustable rate mortgage (ARM).
“There are opportunities out there for buyers other than just the 30-year fixed rate. The average homeowner in the U.S. lives in their home for eight years, and the median is 12.3 [years]. So in many cases, people are choosing this long-term three-decade mortgage, but they may not need it,” Bailey said.
He also shared that the trend of homes selling for over asking price – something seen nationwide over the past few years – is dying out, which is beneficial news for buyers as the market continues to stabilize. This fact alone could be contributing to a continued steady flow of buyers despite changing rates – the latest RE/MAX National Housing Report even revealed that February home sales jumped 16.8% from January, marking the largest month-over-month home sales increase in almost a year.
To hear more from Bailey about the mortgage rate environment and the future of housing affordability in the U.S., watch the Fox Business news segment.