Mortgage rates on home loans are likely to stay in the low 6% range for the rest of the year, perhaps falling to the high 5% range in the spring of 2025, a new analysis by Realtor.com estimates.
The Fed's announced 0.5% rate cut in September raised hopes that lower mortgage payments would make homes more affordable for would-be homebuyers, and perhaps encourage others, reluctant to move on because the cost of a new mortgage would be higher than their current payment, to re-enter the market.
The Realtor.com study suggests that markets that have a high percentage of owner-occupied homes with a mortgage are likely to be most positively affected by lower rates. Metros with the highest rates of owner-occupied homes with a mortgage were led by the Washington, DC metro, Denver, Raleigh, Virginia Beach, Portland, OR, Baltimore, Seattle, Atlanta, Indianapolis, and San Diego.
"Market rates continue to exceed current rates for most homeowners keeping them locked in 'golden handcuffs," it said. "As mortgage rates decline, real estate sales activity is expected to pick up in these areas."
The question is how older homeowners will respond. "Age and high home ownership rates also create more insulated markets," the report commented, noting "a strong correlation between a larger proportion of older homeowners (aged 65 and above) and the prevalence of outright homeownership." These owners have had more years to benefit from both home value appreciation and accumulated equity in their homes.
Metros with the highest share of owner-occupied homes without a mortgage include New Orleans, Buffalo, Pittsburgh, Miami, Tampa, Detroit, Birmingham, Houston, Oklahoma City, and Cleveland, OH.
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