June 24, 2024
Should house hunters dive into today’s housing market? Or is it safer to wait until rates have fallen a bit further?
Yahoo! Finance published a mortgage rate report in June of 2024, and that report includes a prediction that home loan interest rates could (as stated by Fannie Mae) remain in the 6% range for the rest of 2024.
That affects conventional mortgages, FHA loans, and even need-based mortgages like those offered by the USDA.
According to the article, Fannie Mae “predicts 30-year fixed rates will be 6.7% at the end of 2024.” That’s better than the May forecast when Fannie Mae predicted home loan rates could hit 7% by year’s end.
The Yahoo! Finance article points out that home loan interest rates are coming down, but slowly over time. How will this affect your summer house-hunting plans? For some the answer is simple. Start looking no matter what the interest rates might be.
It’s More Than Just The Numbers
Home loan interest rate data is just one piece of a bigger picture you should know about before house hunting. One important source of housing data, the Core Logic Housing Price Index, notes home sale prices could rise more than 3% compared to last April when the data collection began.
Housing prices are often affected by a lack of houses for sale. If you are in a market that has more homes than buyers, prices may be lower than in areas where there are multiple offers for practically every house with a For Sale sign in the yard.
Some markets have fewer houses for sale than others. That makes it harder to find a suitable home, and there is sometimes pressure on borrowers who would otherwise opt in for buyer protections, like a contingency clause where the sale of the home hinges on the outcome of a home inspection.
Higher demand makes it tough to negotiate with the seller. Consider the 6% seller concession allowed under FHA mortgage loan rules in HUD 4000.1 which in a buyer’s market is a more common negotiation.
In a housing market with fewer homes for sale, the seller has little motivation to agree to pay a 6% seller concession. There are likely borrowers in the market who won’t ask for it, which gives them an advantage.
Should House Hunters Wait For Rates To Improve?
We have heard talk of a housing market recovery ever since the end-of-year predictions for home loan interest rates back in the winter of 2023.
The predicted changes didn’t perform as expected. Many wonder if there are simply too many variables to accurately predict when rates will begin to improve and move closer to the low end of the 6% range.
All indications say it’s unrealistic to hope for a return to the 5% FHA home loan interest rate range anytime soon.
Mortgage rates are likely to stay in the 6% zone for some time. That does not mean the Fed won’t cut rates at some point later on, but for now, the 6% rates persist.
If you need to consider buying a home with an FHA mortgage, it may be safer to consider the interest rate you are offered when you apply to be within the range of a new normal.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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