Is the housing market crashing? Where are Mortgage Rates?

The current mortgage rate and what we can expect from the housing market

The housing market went through quite a challenge in the past few months, with the inflation and mortgage rates being out of control. However, on June 13th, the Labor Department stated inflation cooled down to just 4% a year. In other good news, the Federal Reserve also mentioned that rates will remain the same, at least for a while.

 

Did these changes affect the market?

 

When inflation is cooling, you will usually see that mortgage rates are falling, and that’s what’s happening in this situation. The average interest rate for a 30-year mortgage was 6.99% last week, and at the time of this writing on June 28th, it’s slightly higher at 7.11%. By comparison, the APR this week is 7.13%, just a 0.02 % increase from last week.

The 20-Year Fixed Rate is at 7.20% right now, and it saw a 0.4 % increase compared to last week’s 7.16%. The APR for the 20-year mortgage is 7.22%. A similar trend can be seen in the case of the 15-year fixed rate, which has a rate of 6.47%; last week, the rate was 6.43%, so we see a very slight increase here. The APR rate is also very close, at 6.50% right now.

The 10-year fixed rate saw a slight increase too. Last week the average rate was 6.59%; now, the average rate is 6.70%. The APR for this 10-year rate is 6.72%. Also, if you’re looking for a 5-1 ARM rate, at this time, the interest rate is 6.08%. However, the APR is higher, sitting at 7.99% right now. If you want to go for a 10-1 ARM, the average interest rate is 6.51%, and the APR is 8.01%, the number we can find this week.

 

 

The 10-year fixed rate saw a slight increase too. Last week the average rate was 6.59%; now, the average rate is 6.70%. The APR for this 10-year rate is 6.72%. Also, if you’re looking for a 5-1 ARM rate, at this time, the interest rate is 6.08%. However, the APR is higher, sitting at 7.99% right now. If you want to go for a 10-1 ARM, the average interest rate is 6.51%, and the APR is 8.01%, the number we can find this week.

 

What’s the situation in Maryland?

 

Maryland is relatively close to the average national interest rate, at least for the time being. You can expect an average rate of 7% for a 30-year fixed mortgage, which is within the ballpark of the overall national numbers. Regarding the average ARP for a 30-year fixed loan, you can expect it to be around 7.105%.

Of course, this will vary from one lender to the other, with some lenders going as low as 6.5% for their clients. That’s why it’s essential to assess the current rates and understand what factors might affect your own mortgage rate.

In case you want a 20-year loan in Maryland right now, the expected average mortgage rate is around 6.625%, with 6.500% on average for a 15-year loan. However, you can find cheaper options that go under 6% for both durations. Of course, the monthly payment and requirements will vary, but these are the average rates you can expect for the week.

 

 

Will we see the mortgage rates going up?

 

The market is always unpredictable, there was a drop in rates, and now they have started getting a bit higher than usual. However, there’s not as much volatility in the market compared to previous months. We can expect these rates to change during summertime, but not too much. Some regions have seen a massive increase in mortgage rates, while others have stabilized, with Maryland being a prime example.

According to Forbes, the existing home sales price was 3.1% lower compared to a year ago. It marked the fourth consecutive month when the national home price declined year over year. That came from 131 months of increases. If we check the data, it shows that now might be a great time to purchase a home, especially with some regions having a continual price decline. Yet with summer coming and people looking for new properties to buy and revamp, that decline could be over for a while.

 

Is the housing market about to crash? Why do we think that won’t happen?

 

The National Association of Realtors states there was a 2.9-month supply of homes in April 2023. By comparison, April 2022 saw a 1.7-month supply. While the inventory is still low, the number of homes available on the market is higher than last year. We can’t expect a price crash; if anything, the market might stabilize very soon.

Another critical thing to note here is that builders are bringing lots of new homes to the market. There’s still a massive demand for homes, and there are also existing homeowners that want to move. This means customers have options, and we will see a balance between supply and demand. While it won’t happen overnight, we can expect the supply to increase, which will help normalize the market. That also means a housing market crash is very unlikely at this time.

 

 

Aside from that, we should also note that demographic trends create new buyers for the US housing market. There’s a tremendous demand for bigger homes, especially among Americans that owned homes during the pandemic, primarily when many now work from home. Then there’s also the fact that millennials are in their prime buying years. Another category keen on buying properties is Hispanics, a growing and relatively young demographic in the US.

Lending standards are also stringent, which means it’s doubtful to see home prices artificially bid up within the market. That would only happen in the case of loose lending standards. However, it’s not the case right now. Things are relatively stable on this front, so we don’t need to worry about a house market crash for the time being.

There’s also another sign that the housing market is not close to any crash. That comes in the form of muted foreclosure activity. When the housing crash happened, millions of foreclosures on the market affected prices. However, that’s not the case right now since most homeowners have a significant equity cushion. We’ve seen record lows for foreclosures in the past few years, so the market is undoubtedly under control in that regard.

 

 

What’s the “days on the market” average for properties?

 

An interesting thing to note about the housing market is that, at least for 2023, houses sit on the market a bit more than last year. While houses stayed around 17 days on the market in April 2022, data from this year suggests that you can expect homes to be sold in approximately 22 days on average. That’s a significant increase compared to the last year, but there’s no reason to worry. The inventory is still very tight compared to other years, and homes are selling rather quickly. Yet we still need to note that at least on a year-per-year basis, houses tend to stay more on the market.

 

What can we expect from the mortgage rate and housing market within the next few weeks?

 

Mortgage rates have seen a little increase recently; the trend might continue for at least the next few weeks. However, we might see a decline later during the summer, at least based on some expert estimates. When it comes to the housing market, the overall drop in price suggests it’s the perfect time to buy.

Can we expect the housing market to see a price increase very soon? That’s certainly a possibility since we rarely see a consistent monthly drop. We will continue studying the market and provide you with all the information you need to make the right decision when buying a new property!

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Sourcing:

https://www.bankrate.com/mortgages/mortgage-rates/#mortgage-industry-insights

https://www.bankrate.com/mortgages/mortgage-rates/maryland/

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