Foreclosure Rates Decrease and Purchasing Power Increases in Virginia Beach

The long-awaited moment is gradually arriving in the Virginia Beach community, as a key factor that has been affecting potential buyers’ decisions is the high mortgage interest rates. But recently, the average mortgage rate has been decreasing, following the release of certain economic data last month.

In a recent report, Freddie Mac highlights that the average 30-year fixed mortgage rate is now 6.12%, showing a drop of 1.37% compared to the previous year. As for the average 15-year mortgage rate, it stands at 5.25%, which is 1.53% lower than last year. This change means significant relief for potential buyers, as they now also have greater purchasing power.

As the economy recovered after the pandemic, inflation reached 9.1% in June 2022. In response, the Federal Reserve increased interest rates for almost two years to curb this inflation, and this strategy managed to reduce it to 2.5%, the lowest since 2021. At the same time, the yield on 10-year Treasury bonds has also fallen to 3.69% after reaching 4.98% in October last year, contributing to the drop in mortgage rates nationwide.

Real estate agents across the country have noticed that clients are waiting for rates to drop before entering the market to buy or, in some cases, to sell their homes. A buyer’s purchasing power is linked to their income, existing debts, and current interest rates. According to the Mortgage Bankers Association, as interest rates began to fall, purchase applications gradually increased, with a 3% rise in home purchase applications in early September, although it was 4% lower than the previous year. This disparity is likely due to home prices continuing to rise year after year.

Many homeowners are looking to refinance their homes at a lower rate than they initially obtained. As rates began to fall, the proportion of refinancing applications averaged 46% in August, 10.7% higher than the previous month and 20.8% higher than last August.

These lower mortgage rates will attract not only more buyers but also sellers to the Virginia Beach market and the nation in general. When rates drop even further, more homeowners will feel motivated to move and put their homes up for sale, alleviating the housing shortage the country faces.

Thanks to this new activity, future sales seem more promising than in recent times. Lower mortgage rates are transformative for potential homebuyers, as they offer greater purchasing power in this market, which is quite competitive for sellers today. This will not only expand their options but also allow them to make stronger offers to secure the desired home.

Available Foreclosures: 

Virginia Beach: 120 homes available.

By Elías DaSilva | 21 de octubre de 2024.