It's no surprise, rates have really stimeyed growth in the residential real estate sector for most of 2023. While home values have kept rising despite think tanks predicting a 4% drop, high rates have had a "lock in" effect on would-be sellers where selling and assuming a new loan at a significanly higher rate has gridlocked the housing sector. A glimmer of hope released this week has the FED suspending future inflation-fighting rate hikes and predicting a calmer, slowly lowering rate pool in 2024. Current rates below courtesy of Bankrate.
What does this mean for pent up demand? Both transactions, and values, will increase, and at a faster rate than the 5% appreciation brought by 2023. An article by Bankrate's Jeff Ostrowski states "After surpassing 8 percent in late October, mortgage rates have moved lower. One big driver: Inflation has cooled, which means the Federal Reserve could wrap up its hiking cycle. The Fed last hiked its key interest rate in July, which brought up borrowing costs on a variety of financial products, including mortgages." Where are mortgage rates heading?
Mortgage rates have done a 180 as of late, tracking back down under 8 percent. With inflation cooling and 10-year Treasury yields declining, the 30-year fixed mortgage could head into the 6 percent range by next year, said Lawrence Yun, chief economist of the National Association of Realtors, at the group’s conference in November.
"I believe we've already reached the peak in terms of interest rates," said Yun.
The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. Your rate might be higher or lower than what trends show, depending on your credit score and other factors.
Whatever comes of the slow decline in rates, you can bet one thing, that the Jersey Shore market will benefit from it in both higher home values, and increased numbers of buyers gunning for postion at the top of the offer piles! We are years out from a leveled out housing market.