- Borrowing costs are falling, but prospective homebuyers should not realize just how much borrowing costs will fall.
- “Timing the market is never a good thing,” Bank of America’s Matt Vernon told Business Insider.
- Homebuyers should enter the market when they are ready, he said.
Bank of America executives say mortgage rates are falling at the fastest pace since the 2008 housing crisis, but potential homebuyers shouldn’t wait to see how far rates will fall. Stated.
Instead, if you’re ready to buy now, you should.
“Timing the market is never a good thing,” Matt Vernon, head of consumer finance, told Business Insider. “You’ll be financially and emotionally prepared and ultimately find a home that meets your dreams and needs.”
Homebuyers have faced a number of headwinds this year, with mortgage rates, rising prices and tight inventory keeping many homebuyers on the sidelines.
But they may have already started heeding Vernon’s advice. From April to October, the percentage of consumers waiting for market improvement decreased from 85% to 62%. bank of america report found.
During this period, the average interest rate on a 30-year fixed mortgage was 6.28% to just under 8%the highest since the early 2000s.
On the other hand, housing prices is growing at a faster pace than household income, Historically, the average earner spends 41% of their paycheck on housing costs, making the market even more unaffordable.
These factors are dampening current market optimism. In a Fannie Mae survey conducted in early to mid-November, only 14% of consumers surveyed thought it was a good time to buy a home, the report said. lowest level ever.
Still, the desire for homeownership remains high, Vernon said. In fact, a Bank of America survey found that 53% of respondents believe homeownership is the primary definition of financial success.
It also ranks higher in the broader definition of success than options like raising a family and achieving investment goals.
The US Federal Reserve is likely to start lowering interest rates next year, which is expected to further ease the housing market. But some analysts warn that further downside may be limited as mortgage rates will be 6% to 7% next year.
For now, it’s difficult to know what impact the latest slide has had on homebuyer sentiment, especially since December is traditionally a low-volume month for the mortgage industry.
That said, a clear downward trend in interest rates could be enough to bring some companies back into the market, given the confidence to refinance in the future, Vernon told Business Insider.
“But it’s really an individualized answer based on the homeowner’s needs, which is the basis for entering the market,” he said.
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