Falling Mortgage Rates Are Reigniting Buyer Interest
If you’ve been holding off on listing your home because you’re unsure about buyer demand, now might be the perfect time to reconsider.
After an extended period of high mortgage rates keeping many buyers on the sidelines, the tide is turning. Mortgage rates are gradually decreasing due to various economic shifts, and just yesterday, the Federal Reserve reduced the Federal Funds Rate for the first time since they began hiking it in March 2022. While the Fed doesn’t directly set mortgage rates, this move opens the door for further rate declines. Additional rate cuts are also anticipated next year, which could push mortgage rates even lower. With these lower rates, more buyers are stepping back into the housing market. According to Lisa Sturtevant, Chief Economist at Bright MLS:
“A decrease in borrowing costs will spark greater homebuyer interest . . . Falling rates will also encourage more sellers to enter the market.”
For sellers, this resurgence in buyer activity is good news.
Lower Rates, Higher Buyer Demand
The graph below demonstrates the correlation between dropping mortgage rates and increasing buyer activity. The orange line depicts the average 30-year fixed mortgage rate, while the blue line represents the Mortgage Bankers Association (MBA) Mortgage Application Index, which tracks the volume of mortgage applications.
As the graph shows, when mortgage rates (orange) drop, mortgage applications (blue) increase, indicating more buyers are reengaging in the market (see graph below):
What This Means for You
According to the National Association of Realtors (NAR), home sales rose in July, marking a welcome change after four consecutive months of declines. If you’re a homeowner considering selling, this boost in buyer activity is a big advantage.
More buyers entering the market means increased competition, which often results in higher offers and quicker sales. Edward Seiler, AVP of Housing Economics at the Mortgage Bankers Association, expects this trend to persist:
“The MBA predicts that slower home-price growth, combined with falling rates, will ease affordability challenges and drive greater market activity.”
This improved affordability could bring even more potential buyers to your door.
Conclusion
The recent drop in mortgage rates is already enticing more buyers back into the housing market, and experts anticipate this trend will continue. If you’re thinking about selling, now’s the time to start preparing your home to capitalize on this renewed buyer interest. Let’s connect to discuss how we can take advantage of the current market conditions and get your home sold.
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