The 30-year, fixed-rate mortgage averaged 5.10% for the week
ending May 26, down 15 basis points (one-hundredth of 1%) compared to a week
earlier, according to Freddie Mac. It was the lowest rate for the month after
hitting as high as 5.3% on May 12—the highest rate of the year so far.
Even as rates have calmed down lately, the more than 5% average
in recent months can come as a sticker shock to homebuyers who saw an average
2.95% rate for the same mortgage product a year ago.
The average rate for a 15-year, fixed-rate mortgage was
4.31%, down 12 basis points from last week, but sharply higher than a year ago
when it averaged 2.27%.
Those rates don’t include closing fees and other costs
associated with obtaining a home loan.
What’s Next For The Housing Market?
Higher mortgage rates coupled with skyrocketing home prices
have been a one-two punch this year for the many Americans trying to buy homes,
who’ve pulled back spending recently.
“The housing market has clearly slowed, and the deceleration
is spreading to other segments of the economy, such as consumer spending on
durable goods,” said Sam Khater, Freddie Mac’s chief economist, in a release.
Almost 80% of Americans surveyed this month said they have
pulled back from the housing market when it comes to shopping for a home,
buying a house or getting a refinance, according to a new Forbes Advisor
survey.
Likewise, a survey from the National Association of Home
Builders (NAHB) shows an increasing number of people deferring their home
search for a year or more: 25% of respondents in the first quarter of 2022, up
from 23% in the previous quarter.
“By far, the most common reason these long-term searchers
cite for not having bought by now is their inability to find an affordable home
(48%),” the NAHB researchers wrote.
Experts don’t expect much relief for buyers any time soon in
terms of mortgage rates falling. A mid-May forecast from the Mortgage Bankers
Association (MBA) calls for rates to stay above 5% for the rest of 2022.
What Can Homebuyers Do In a High-Stakes Housing Market?
In such a challenging and costly market, one of the best
things a would-be buyer can do is actively seek out as much support as
possible. This includes finding a good, reputable real estate agent as well as
a lender or mortgage broker.
Keeping strong communication between your real estate agent,
lender and other related professionals is key to navigating the tough housing
market, says Victoria Ray Henderson, a real estate broker at The Buyer
Brokerage, covering the greater Washington, D.C. area. In many cases, it’s not
necessarily more money that a seller wants but flexibility or some
accommodation on closing time or other terms.
If realtors can determine what those conditions are and
buyers can meet them, “that means we don’t feel like we’re overpaying because
we’re accommodating them in some other way,” she says.
Above all, don’t overlook the importance of having your
financing secured and ready to go. Henderson says she prefers working with
local lenders who understand the market, which helps your offer be as strong as
possible.
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