Potential home buyers are getting whiplash from mortgage rate volatility during their home searches these past few months.
The typical house hunter who started searching in July and closed the deal on their new home in September saw their potential mortgage rate fluctuate by roughly half of a percentage point every four weeks, according to a new report by Redfin.
This is reportedly the most volatile three-month period since 1987, when mortgage rates went wild after hitting almost 19% as the Fed tried to curb inflation, Redfin says.
In the analysis, Redfin ran a scenario on a buyer looking at a $500,000 home and found that the buyer’s total expected payment declined by about $64,000 (5.8%) from July to August, and then shot back up by about $118,000 (11.4%) from August to September.
Which makes it extremely hard for buyers to plan ahead, one of the reasons many are choosing to wait and see how things shake out before returning to the market.
The volatility in mortgage rates will likely continue in the near term due to the inflation fight, but mortgage rates should fall in the next 12 to 18 months if inflation eases as expected, according to Justin Dimler of Bay Equity, Redfin’s mortgage company.