In October, mortgage rates soared to a 23-year high of 8%, casting a shadow over the housing market. However, a swift change has occurred since then, with rates now cooling down to levels not seen since July. This shift has left some borrowers receiving quotes in the 6% range, sparking renewed interest in the real estate landscape.
According to industry experts like Larry Steinway and Gregg Harris, top-tier borrowers with strong credit scores and substantial down payments are being quoted rates as low as 6.375%, ushering in an uptick in demand. This comes as a relief after the affordability challenges posed by rates hovering around 8%. But is this enough to reinvigorate buyer demand in the long run?
Jon Overfelt, director of sales and principal at American Security Mortgage Corp, sheds light on the nuanced scenario. While transactions have increased in the short term, the long-term picture hinges on the stability of rates. The recent dip in mortgage rates is undoubtedly good news, but will it be a catalyst for a sustained resurgence in the housing market?
With most mortgage holders already enjoying rates below 6%, a traditional refinance boom seems unlikely. Industry experts, including Robby Oakes, managing director at CIMG Residential Mortgage, suggest that homeowners are more inclined to explore home equity options, given the reluctance to give up low-rate mortgages. While a traditional refi boom might be a distant prospect, a potential small refi 'bump' may arise from cash-out refis.