Mortgage rates never fell below 6% in 2023 and you probably didn’t even have to follow the news to notice; buyer hesitancy told the story.
Even as mortgage rates have declined from their more than 7% peak in Q4 2023, they still haven’t fallen back below 6%—the threshold everyone is waiting to cross—especially aspiring homebuyers. Buyers understandably haven’t wanted to pay a mortgage they can’t afford…or one higher than those famous lower rates of the past.
You and your business don’t have the luxury of waiting on the sidelines for a more favorable market. So what can you tell clients to reassure them in this mortgage climate?
Highlight the positive signs
Recent data from Fannie Mae suggests that mortgage rates will be falling below 6% sooner rather than later. The Federal Reserve has also indicated that inflation projections are heading in their desired direction and rate cuts will be coming in 2024.
Even if this ultimately incentivizes buyers to stay in their holding pattern, make sure they’re aware of the positive indicators. This way they can be prepared buy when the time is right—and most important, remember you.
Stress that there’s less competition
Is there a silver living here? With many buyers staying out of the market for now, there’s less competition, as reflected in recent existing home sales data. Mortgage rates may be high, but if there’s a motivated seller, your buyer client could leverage the lack of other interested parties to get a favorable deal.
Recent reporting also shows mortgage applications are rising, i.e. a low-buyer market isn’t going to last forever. Make sure your clients know that.
Explain that low rates were an aberration
Many prospective sellers who bought when rates were low are reluctant to list their home too, since they won’t be getting a better mortgage deal with their next home. Prospective buyers, meanwhile, regret not buying during the periods of lower interest rates.
For the buyers at least, if they’re waiting for 2-3% mortgage rates to come back, you should explain that those were a historical aberration, caused by the COVID-19 pandemic. Just because they missed a rare opportunity doesn’t mean they should never buy a house—and that means educating them about what more “normal” market conditions are.
