By Thomas Carroll, REALTOR®
The average interest rate for the 30-year mortgage has actually been declining over the past 60 days. We saw it peak in mid to late June at around 6% and it has since fallen to roughly 5%. So, if you are looking to buy or sell, what does this mean for you?
For buyers, it means finding a lender that allows you to take two critical steps. First, the lender needs to let you lock in your interest rate while you shop for a home. This protects you incase rates begin to rise again. Second, the lender needs to allow your rate to float down if rates continue to drop. Working with a lender that will allow for interest rate lock and float down will set you up
for success regardless of what interest rates do. If you have locked your rate as a buyer and rates continue to go up, good. You’ll face less competition when putting in offers. You will likely have a greater ability to negotiate for price reductions, seller credits, and closing cost help. If they go down, well that is a win for you too because with the ability to float down your rate, the cost of the mortgage just decreased.
What does this move in interest rates mean for sellers? Well rates fell from 6% to 5% because the demand for mortgages was just not there at 6%. This move should bring more buyers back into the market. If the home is priced appropriately based on recent comparable sales, do not freak out just because it does not sell in a week. The average days on market in Baltimore for example, sits at around three weeks. You should only consider cutting your price once you have hit or exceeded the average days on market for the area.
Ultimately, in buying or selling a home, you do not need to predict the future of home prices or interest rates. You just need to know how to effectively analyze the past and mitigate future risk. As your agent, that just part of the value I bring to the table and if you or anyone you know is looking to buy or sell, I would love to hear from you. Contact me today!