HARRISONBURG, Va. (WHSV) – Mortgage rates across the nation fell last week at the fastest pace in months with rates on 30-year mortgages dropping below 6.5% for the first time since May 2023.
WHSV checked in with a local realtor to see the impact this could have on the local housing market in the Valley.
“We are seeing mortgage rates in that 6.5-7.5% range so that’s a full point range. So much of that is going to depend on someone’s creditworthiness, their income, their debt, their assets,” said Zach Koops, a relator brokered by Real. “A purchaser can pay to have that rate reduced. They can pay like a 10% amount of their loan and reduce that rate — a lot of folks are doing that as well.”
Koops said the drop in mortgage rates comes from last week’s poor jobs report amid fears of an economic recession on the horizon. This caused Wall Street to engage in one of the larger sell-offs of the year. While it is bad news for the economy, it will boost the housing market.
“Whenever mortgage rates are low, more buyers tend to enter the market, so that can lead to increased competition for homes … That often will result in homes selling faster and in some cases for higher prices as well,” Koops said. “So, it can be good news for sellers in that case because it can mean more potential buyers and a better chance of selling at a good price. For buyers, the lower rates typically mean they can afford a more expensive home or have lower monthly payments. But it can also mean that the market becomes more competitive.”
Koops said the local housing market will remain volatile because of the economic fears and the presidential election. The Fed is also expected to reduce the prime rate, the interest rate that banks use to set rates for different types of loans and lines of credit, in September.
“We should continue to see volatility, meaning prices to increase, activity to increase, and at the same time, be on the lookout for changes in interest rates to go right back up a little bit,” Koops said. “It’s just something that you can’t really pinpoint perfectly.”
With mortgage rates at their lowest in over a year, Koops said some homeowners who are locked into higher rates may refinance their homes. For those looking to buy a home, Koops said volatility can be helpful and stressed the importance of being prepared.
“Being prepared is everything, because if you’re entering a multi-offer situation, that’s competitive,” Koops said. “[If] you haven’t done your homework, someone else who already has is going to win that contract.”
Koops said mortgage rates have seen a lot of fluctuation throughout the year based on factors like inflation and the Fed’s decisions on interest rates.
“When the Fed gets involved, they want to try and keep inflation under control, which means they’re going to raise interest rates,” Koops said. “That ultimately made borrowing more expensive, which slowed down the housing market because fewer people could afford to buy homes, but now that rates are coming back down because the economy is not looking as good, that activity will change and flip-flop. So, we’ll see more activity from buyers because they can afford these rates a lot better.”
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