When Boston condo mortgage rates hit 6 percent in September, buyers were taken aback. Not since 2008 had rates been so high. But as rates soared past 7 percent, homebuyers’ perspectives changed.
So in the past two weeks, as the average rate on a 30-year, fixed-rate mortgage fell to 6.67 percent — down from a peak of 7.16 percent one month ago — agents began to see a spate of activity from prospective buyers.
“It’s not like they’re getting a good rate still. It’s like double what they were a year ago,” said Mike Fabbri, an agent with Nest Seekers. “But there’s improvement. There’s confidence in the market and there’s just signs that things are getting better. And that’s when people start to flood the market.”
Agents say the roller-coaster that mortgage rates have been on for the past year has created a more savvy client base, one that knows when to enter the market and when to hold off. As mortgage rates dropped, mortgage loan applications — which had been slow for months — increased 2.2 percent on a seasonally adjusted basis in just a week, the Mortgage Bankers Association reported. Refinancings increased 2 percent.
“They’re watching it like people watch the stock market,” Compass agent Diana Sutherlin said. “And some of them are trying to play it like the stock market.”
Mortgage rates rose during an already tumultuous time for the housing market, which had run up because of frenzied buyers, cheap loans, a shortage of listings and other factors. There were a lot of “red flags,” said Erin Sykes, Nest Seekers’ chief economist and also an agent.
Even the congressional elections seemed to affect home shoppers.
“All people want is some amount of certainty,” Sykes said. “I had very few showing requests in the two weeks prior to midterms, and then the day after midterm elections, I had six showing requests come in.”
The rate drop came right after the elections, she noted.
Some agents interviewed for this story referred to the saying “Marry the house, date the rate,” meaning that at some point, buyers can expect to refinance at lower interest.
“Anybody who’s still in the market or who has entered the market since the late spring, they are continually coming to terms with the fact that rates are much higher, and they’ve decided they want to buy anyway,” Douglas Elliman agent Lindsay Barton Barrett said. “The people who are buying right now are buying with the understanding that the interest rate they get at closing is probably not the interest rate they’re going to have 10 years from now.”