Mortgage rates are now falling, and the slowdown in inflation could bring them down even further - perhaps even below 6 per cent.
According to Freddie Mac, mortgage rates on 30-year fixed loans averaged 6.33 per cent in the week ending 12 January.
Meanwhile, Mortgage News Daily, which reports average rates for the day rather than the entire week, had rates at 6.07 per cent as of Thursday afternoon. This is a far cry from two months ago when rates were as high as 7%.
Typical monthly mortgage payments are now below $2,000, a psychological milestone for many cash-strapped homebuyers.
With inflation showing a marked slowdown, mortgage rates are expected to follow suit in the coming months.
Mortgage rates have been rising as the US Federal Reserve has raised its own short-term interest rates to combat inflation. The Fed's actions appear to be working.
The inflation rate for December was 6.5%. While still high, it has fallen year-on-year from 7.1% in November and is well below the peak of 9.1% in June. This could lead to an easing of interest rate hikes by the Federal Reserve, which could lead to lower mortgage rates.
If inflation continues to fall at the current rate, we could see mortgage rates below 6% by the end of February. He expects rates to remain in the 6% to 7% range for the next few weeks until there is a clear drop in inflation.
In the meantime, buyers are getting some rest.
According to Realtor.com, the median listing price for homes fell to $400,000 in December from a peak of $449,000 in June. Prices are rising 8.4 per cent annually, but this was the first month in a year where price growth was only in single digits.
The drop in prices from the summer peak, coupled with a decline in mortgage rates, is lowering mortgage payments and increasing buyers' purchasing power.