Mortgage Market News

According to the Mortgage Bankers Association, falling interest rates over the last three weeks has led to a 7% increase in mortgage applications.

The FED has signaled that they will make a much lower rate hike in February. Since the end of December, mortgage rates have trended downward on positive inflation number news. The average interest rate on a 30-year fixed-rate mortgage is currently at 6.2%. Buyers are taking advantage of the lower rates to re-enter the real estate market.

Some homeowners are even refinancing their loans. Refinance applications were also up 15% week over week.

“Homebuying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market,” said Joel Kan, an MBA economist. “Many have been waiting for affordability challenges to subside.”

Low inventory still remains a challenge. Realtor.com has said that the entire country is facing a housing shortage of 5.24 million homes. Homebuilders are said to be ‘conservatively optimistic’ about building in 2023. The 3 consecutive FED rate hikes of 75 basis points brought new housing starts to a halt.

The FED is expected to only raise their rate 25 basis points in both February and March. This is bringing mortgage rates lower and may be an encouraging sign for homebuilders.

Overall, the Lake Tahoe real estate market is still experiencing low inventory. Currently, we are at a 2 to 3 month supply of listings. When we have less than a 5 month supply of listings, it is traditionally a seller’s market.

The Median price of home sales for 2022 was still up 5% year over year. While there have been some price reductions, homes are still selling at 98% of list price.

Is it time to buy?

To keep interest rates in perspective, the average interest rate over the last 30 years has been at 7.7%. The FED had reduced their rate after the crash of 2008, and again during the pandemic as a way to stimulate the economy. Rates of 3 and 4% are probably not going to return.

Since the prime rate, or what lenders usually offer as mortgage rates are usually 3% above the FED rate, it does seem that lenders are responding to a lack of buyers and reducing the markup. As more buyers return to the market, we may see interest rates rise again.

Overall, this might be a great time to consider locking in your interest rate. With less competition for available homes, you might save on the purchase price to offset the higher borrowing costs.

Contact me today for more information about the Lake Tahoe real estate market.