April 1, 2024
The first quarter of 2024 was a positive one for some house hunters. But many are wondering if rates will get closer to the mid to lower 6% range soon and whether to wait until that happens to start planning for a new FHA mortgage.
A CNBC news report on mortgages published in the first quarter says there was higher demand in first three months of 2024.
Higher demand potentially means higher sale prices, but not always. This year, it’s likely that is one of many contributing factors to the current rate environment.
Did the supply rise to meet demand in Q1? CNBC notes that inventory went up nearly 6% overall. That meant as many as a million houses were for sale at the end of February.
Home Sales Up In Early 2024
That same report (released at the end of March 2024) mentions existing home sales increasing nearly 10% in a single month. What does all this mean to house hunters trying to find a home in the second quarter?
While it does not necessarily indicate a persistent trend one way or the other, some borrowers may have taken advantage of a mortgage rate drop around that time, when rates moved closer to the mid-6% range.
That dip may have been a bump in the road, as rates have crept closer to 7% since.
But Q2 may see some rate improvement putting the markets back to a range closer to mid-6%. Time will tell.
Home Buying Plans: Consider Carefully
Some borrowers feel they need to monitor rates daily. In some cases borrowers consider this are hoping to make their move only after rates drop to a more acceptable-to-them level.
The problem with this approach is that day-to-day trends don’t give you an idea of whether or not those rates will persist in a week or even a month.
Timing your house-buying plans to a time when rates seem consistently lower has one complicating factor that may change your mind about this approach.
You cannot ask for an interest rate lock commitment from the lender until you are ready to buy a specific property you want to buy. You can’t get a rate lock agreement in a general sense, only when you are ready to buy.
And unless the rate changes last longer than the short term (a day or even a few weeks) you might simply be watching common fluctuations rather than a defining trend.
What To Know About Home Loan Rates
If you don’t start planning for a new home loan until rates have fallen, you could face more uncertainty than you would if you make your plans now, save your money, and decide to wait instead of committing. Why?
Mortgage rate changes can be unpredictable, and even if there is an upward trend brewing when you initially start your planning and saving stages, such trends aren’t guaranteed to persist.
You could find yourself in a much better place to buy if you start saving and preparing sooner rather than later in hopes of a more ideal rate.
If you want to watch rates and begin your home loan journey once they have hit an identifiably lower trend, you’ll need to watch rates over a longer term than daily or weekly.
Good advice for buying a home in these circumstances? It includes not worrying prematurely about rates. What do we mean here? The available mortgage rates don’t mean much to the borrower until they are ready to commit to buying a specific home.
So today’s rates mean nothing if you aren’t ready to commit. When you are ready, if the rates are still higher than you would like, consider asking the lender about paying for discount points to lower the rate, or consider applying for an FHA adjustable rate mortgage.
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.
Browse by Date: