Mortgage Rates Are Dropping: What It Means for You & Why You Should Act Now

Mortgage Rates Are Dropping: What It Means for You & Why You Should Act Now

Mortgage rates have been on a rollercoaster this year, and recent changes could have a significant impact on your decision to buy a home. Rates have dipped a quarter percent since January 2nd, 2024—today’s average 30-year fixed rate is 6.49%, compared to 6.72% at the start of the year. While this might seem like a small drop, it's important to note that rates have come down from an 8% average in October 2023. This shift presents an opportunity, but it also comes with a warning: rates are unpredictable and can change quickly.

Why It's Important to Act Quickly

The downward trend in mortgage rates is promising, but it’s not a straight line. Rates can fluctuate daily, and waiting for them to hit rock bottom could cost you in the long run. For instance, on August 2nd, we saw rates as low as 6.34%, but that was just for one day. If you were prequalified and ready to buy, you could have locked in that rate. Instead, rates bounced back slightly, leading to an increase in monthly payments.

While a $25 increase per month on a $250,000 loan might not seem like much, it adds up over time. More importantly, it could be the difference between qualifying for your dream home or having to settle for something smaller. The key takeaway? Be prepared to act quickly when rates dip, so you don’t miss out on potential savings.

What This Means for the Louisiana Housing Market

As mortgage rates continue to dip, more buyers will enter the market, leading to increased demand for homes. This surge in demand will likely push home prices higher, which could create a more competitive environment for buyers. If you're thinking about buying a home, acting now could save you money in the long term.

The expected rise in home prices is modest, at about 4.33% per year over the next five years. That means a $250,000 home today could cost nearly $300,000 in just five years. Waiting for rates to drop further could result in higher home prices, costing you more in the long run. By buying now, you can lock in current prices and benefit from appreciation, amortization, and equity gains.

Additionally, the Federal Reserve is expected to cut rates by at least 25 basis points at their September meeting, and possibly by 50 basis points. This anticipated rate cut could lead to an immediate improvement in mortgage interest rates. If you go under contract now with a 45-day closing period, you could take advantage of these lower rates when they materialize in mid-September.

The Bottom Line: Why Now Is a Great Time to Buy

Mortgage rates have dropped from where they were a year ago, but the changes have been slight, and rates are still higher than they were in August 2023. However, the prospect of further rate drops, coupled with the potential for rising home prices, makes this a crucial time to consider buying.

Waiting for the perfect conditions can be risky, as those conditions rarely align perfectly. Instead, consider buying now and refinancing later if rates drop significantly. Acting now puts you in a stronger negotiating position before the market becomes more competitive.

In conclusion, the current market presents an excellent opportunity for buyers in Louisiana. By making a well-informed decision based on your financial situation, you can secure a home at a favorable price before rates and home prices potentially rise further. Don’t miss out on this window of opportunity—start your home-buying journey today!

A big thank you to our preferred partners, Lo Weinstein from Approved Mortgage and Corey Burgess at Central Mortgage, for sharing their insights on the latest mortgage rates, market trends, and more. Connect with them here: HERE.