Freddie Mac: Mortgage rates have decreased this week but remain above 7%

Mortgage rates have seen a slight dip after steadily rising over the past few weeks. According to Freddie Mac, 30-year fixed-rate mortgage rates averaged 7.09% on May 9th, down from last week’s average of 7.22%. However, rates for 15-year mortgages also fell slightly to 6.38% from 6.47% the previous week. While these rates are higher than they were last year, this slight drop could present an opportunity for potential buyers looking to secure a mortgage. Freddie Mac’s chief economist, Sam Khater, noted that high mortgage rates are impacting both sellers and buyers, with many potential sellers hesitant to list their homes and elevated house prices adding to affordability challenges for buyers in this high-rate environment.

A recent report from ATTOM found that the number of underwater mortgages, where the mortgage balance is 25% more than the property’s estimated market value, is growing. The South, particularly states like Kentucky, saw the biggest increase in underwater mortgages in the first quarter of 2024. On the other hand, nearly half of homeowners were considered equity-rich during the same time frame, although this percentage is the lowest it has been in two years. While homeowner balance sheets have benefited from increased equity, signs of a cooling market may impact these figures moving forward. Whether you are looking to buy or sell a home, understanding your financial situation is crucial in the current market.

Recent data from Realtor.com shows that homeowners are spending just over 24% of their income on mortgages, a decrease from the previous quarter but still higher than a year ago. First-time buyers tend to spend even more of their income on mortgage payments, with an average of 36.5% according to ATTOM. As home prices and mortgage rates continue to climb, families are faced with tough choices when it comes to buying a home. The decision to buy, downgrade, or allocate more of their paycheck towards a purchase is becoming increasingly common. For those considering purchasing a home, exploring various mortgage lenders and rates can help determine the best financial option for your situation.

Zillow recently named the 25 best cities for buyers on a budget, showcasing locations across the United States where affordability and quality of life are favorable. From metropolitan areas to suburban neighborhoods, these cities offer a range of options for individuals or families looking to purchase a home without breaking the bank. As the real estate market continues to evolve, being informed about the latest trends and opportunities can help guide your decision-making process. Whether you are seeking advice on navigating mortgages, understanding your equity position, or exploring budget-friendly home buying options, leveraging reputable resources like Credible can provide valuable insights and support. Email The Credible Money Expert with your finance-related questions to receive expert guidance and advice tailored to your specific needs.