With the current stock market collapse and the Federal Reserve prepared to make as many as two rate cuts this year, a 30-year mortgage may carry a rate as low as 6% before the end of the year.
People who bought homes with 3% mortgages may fear a recession, leading to a higher likelihood of selling. Hesitation to move to a 6% mortgage home may result in renting.
The monthly payment difference between a $425,000 home with a 3% mortgage and 7% mortgage could be as high as $1,000. A 6% mortgage could reduce this by $200, making buying a house almost as inexpensive as two years ago.
Buying a home soon raises concerns about a buyer's income safety if a recession lowers prices. Housing prices are predominantly high due to limited supply and reluctance from current homeowners with low mortgage rates to sell.
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