Mortgage Rates Dip Below 5% for the First Time Since April

0
60

This year so far, the Federal Reserve has been struggling to contain inflation, which is running well above the central bank’s 2% annual target. In late July, Fed officials voted to raise the federal funds rate by another 75 basis points, continuing an aggressive monetary policy despite signs of slowing gross domestic product growth and the possibility of a recession.

While conventional wisdom dictates that mortgage rates generally follow the Fed’s benchmark rate, that’s not always the case. As pointed out in last week’s column, mortgage activity is being stifled by affordability challenges and uncertain economic conditions. So in an effort to spur demand, some lenders actually lowered their rates.

The slowdown in real estate activity may prove to be advantageous for homebuyers who, not long ago, felt priced out of the market. Mortgage borrowers are getting a much-needed reprieve from rapidly rising interest rates. Home price appreciation, while still at historically high levels, has started to show signs of slowing.

Additionally, buyers are starting to gain more leverage in negotiations, particularly when it comes to contingencies, says Kevin Parker, vice president of field mortgage originations at Navy Federal Credit Union.

[Read More]