Mortgage rates fall for third straight week, a blessing for homebuyers
Mortgage rates fell for the third consecutive week as market uncertainty lingered.
The rate on the average 30-year fixed mortgage dropped to 6.32% from 6.42% the week prior, according to Freddie Mac. Rates have slid 41 percentage points in the past three weeks, following the 10-year Treasury yield as the turmoil among banks unfolded.
The drop continues to provide a window of opportunity for budget-conscious homebuyers, but affordability and inventory challenges remain, especially as competition heats up.
“There was a sharp increase in competition this month, within three weeks the housing market accelerated, and we got an influx of pre-approvals during the days where rates dipped,” Adriana Perezchica, president of Via Real Estate Group, told Yahoo Finance. “But there’s just no inventory and rates continue to be elevated. It’s still a difficult time for buyers seeking affordability.”
Buyers raced to capture dip in rates
Buyers and homeowners have been jumping at the opportunity to make strategic moves ahead of the spring, locking in a lower rate in the last three weeks.
For instance, mortgage applications to purchase a home jumped by 2% for the week ending March 24, the Mortgage Bankers Association found, leading to a fourth straight week of increased purchase activity. Refinance activity also perked up by 5% from the previous week.
But that decline in rates also created more competition as buyers came in from the sidelines. Active inventory remains constrained, so the uptick in demand left some buyers priced out again.
“A home priced at $450,000 will fly off the market,” she said. “With buyers competing, you also get bids over-ask which will also impact your payment. That can be limiting to some families' budget.”
Where will rates go next?
Over the last three weeks, mortgage rates have seesawed, looking different each day, according to the daily tracker at MortgageNewsDaily.
“The mortgage market has seen a partial revival in March, with the recent decline in mortgage rates boosting borrower demand,” MBA President and CEO Bob Broeksmit, said in a statement. “New and existing supply is still low, but lower mortgage rates and slower home-price growth have improved buyers’ purchasing power this spring.”
Those gains, however, could reverse course in the weeks to come if new economic data on Friday shows that inflation is still high, which would prompt further rate hikes from the Federal Reserve. But any additional banking troubles could send the 10-year Treasury yield — and mortgage rates — lower.
“Mortgage rates are unlikely to increase again unless the next inflation report is worse than expected,” Daryl Fairweather, chief economist at Redfin, said in a statement. “Sidelined buyers should be on high alert in the coming days and weeks, which could offer a window to lock in a rate closer to 6% than 7%.”
Gabriella is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.
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