Low Mortgage Rates Ramps Up Homebuyer Sentiment

Over the last two weeks, as of July 11, 2022, the 30-year fixed mortgage average decreased by 0.5%. This response came as an ease to the increased concerns about an upcoming recession. While this decrease in interest rates provides some minor relief to buyers, we should expect to see the continued normalization of the housing market if home price growth slows.

Credit: FreddieMac Market Survey

There is still a shortage in housing supply, however the combination of low housing affordability and the expected slowdown in our economy has the potential to outweigh the benefits of a low interest rate.

Nonetheless, the decrease in mortgage rates represents an increase in purchasing power for all homebuyers. According to Freddie Mac, this 40 basis point drop to 5.3 percent results in about 5% more affordability for home buying. On average, buyers should see about a $100 reduction in their monthly mortgage payments.