Mortgage rates have fallen for the fourth consecutive week, with the average rate dropping to 6.28% for a 30-year fixed-rate mortgage, down from 6.32% the previous week, according to CNN. However, a low inventory of homes for sale is still a challenge for homebuyers, especially first-time homebuyers.
The average mortgage rate is based on applications received from thousands of lenders across the US, from borrowers who put 20% down and have excellent credit. Despite a trend down at the beginning of 2023, rates climbed again in February after robust economic data suggested the Federal Reserve would likely continue hiking its benchmark lending rate.
Hannah Jones, who works as an economic research analyst at Realtor.com, explained as CNN quotes:
Potential buyers continue to face elevated mortgage rates and home prices, making buying less accessible than a year ago,
However, home prices continue to show signs of softening, a welcomed development for buyers. This week’s rate also creates an opportunity for potential buyers to dive in while rates are slightly lower. Pent-up housing demand is evident with every gain in affordability, whether it be softening prices or lower mortgage rates.
Mortgages have remained popular in the US in recent years, with many people opting to purchase homes using this financing option. However, factors such as a low inventory of homes for sale and economic data have influenced mortgage rates. Despite these challenges, the average rate has been trending down entering the traditional spring homebuying season, according to data from Freddie Mac.
The profitability of buying a house using a mortgage depends on various factors, such as the interest rate, housing market conditions, and individual financial circumstances. Generally, a mortgage can be considered profitable if the monthly mortgage payments are affordable and the overall cost of the mortgage, including interest payments and fees, is lower than the potential increase in the value of the property over time.
However, there are also risks involved, such as fluctuations in the housing market and unexpected financial circumstances that could make mortgage payments unaffordable. It’s essential to carefully consider all the financial factors involved and consult with a financial advisor before deciding to buy a house using a mortgage.