Mortgage rates are falling again slightly. Is it time to buy?

Mortgage rates fell slightly for the fifth week in a row, reducing borrowing costs for homebuyers just in time for the spring shopping season.

But one major problem remains – there just isn’t enough inventory on the market. And weak supply continues to keep house prices high.

According Freddie Mac. Rates have been falling since early March, falling nearly half a point since March 2. US inflation also declined last month, with the consumer price index (CPI) rising just 0.1% in March, falling another 0.5% in February; the current index showed an annual inflation increase of 5%, the lowest since May 2021.

While lower rates and slowing inflation are helping potential buyers, lack of inventory continues to be the most significant housing challenge. Sellers are not motivated to list their properties. One of the reasons: more than 85% of homeowners have mortgages with locked rates below 5% and could not buy a new home with the same rate or a lower rate elsewhere. In other words: buying a new property would mean getting new mortgages with rates above 6%.

“With fewer homeowners putting homes up for sale, gains in the number of options for buyers have slowedDanielle Hale, chief economist at, said, “With potential buyers and sellers feeling rather dour about the real estate market, particularly regarding the outlook for mortgage rates, the number of homes sold will continue to be lower than a year ago for the next few months”

The bottom line

A buyer who purchased a home at the median price of $386,797 with a 20% down payment would pay $791 more in monthly mortgage than a year ago. The borrower would have the same principal balance but would pay $1,617 per month with a current interest rate of 6.27%, compared to $825 with an interest rate of 3.2% in January 2022.

“Existing homeowners act as a deterrent to selling because every dollar borrowed costs more,” said Mark Fleming, chief economist at First American Financial Corporation. previously told Yahoo Finance. “The financially sound decision is not to sell.”

A mortgage expert thinks sellers should see a significant change in mortgage rates to jump ship,

“If I have a 3% mortgage, trading for a 6.25% mortgage is not so attractive.” Keith Gumbinger, Vice President of Mortgage Site HSH.comwrote: “If the jump is lower, say 4.5%, it might be more feasible, and especially if I don’t need to increase (or increase by a lot) the amount of the mortgage that I will have to wear to make the move.”

Market inventory rose 15.3% year-over-year to 980,000 units by the end of February, and was up 850,000 units from a year earlier. However, this level of activity is still at a “historic low”, according to the National Association of Realtors. There is currently a 2.6 month supply of homes; a robust market has a supply of around 6 months.

Rebecca is a reporter for Yahoo Finance and previously worked as an investment tax specialist chartered accountant (CPA).

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