How Interest Rates Affect Buying a House in Washington

As of October 8, 2024, the average interest rate for a 30-year fixed mortgage was 6.62%, and 6.15% for a 30-year fixed VA home loan, according to Mortgage News Daily. In 2020 rates were historically low, freeing up extra cash for buyers to purchase the home of their dreams. As you can see, these low rates are no longer available, due to inflation and other economic factors. But as many have predicted, rates did come back down in late summer 2024. In fact, rates are nearly a percent lower this October compared to last year.

Higher interest rates caused many to hold off on plans to sell simply because they were "rate locked", not wanting to lose their historically low interest rate if they were to buy another home. This contributed to a lack of homes for sale in Washington, with only 11,617 condos and houses for sale in August 2023, considerably lower than the previous year. For comparison, there were 31,619 homes for sale in Washington in Aug. 2013. However, this has changed, and we are now seeing increased inventory in 2024 as rates have eased for homebuyers.

Is the Fed finished lowering interest rates in 2024?

When the Fed voted to cut rates by 0.50% 3 weeks ago, traders had rushed to get in position for a small "reset" while the market waited for the most important vote. The vote in question was whether or not the market was ahead of itself in mid-September. With doubt cast on the extent of the Fed's decision, it seemed there was a firm rejection of mid-September's rates and a wake-up call that rates could still move higher. Barring unforeseen circumstances, we'll now need another weak jobs report before re-challenging the low rates in mid-September.

Is it a good idea to lock in a mortgage rate?

Some investors are anticipating rate cuts as soon as early next year, after the current election cycle. The hope is that mortgage rates will lower back down once inflation is back under control, but there are never any guarantees when predicting mortgage rates and trying to time the market. However, one guarantee is the sooner you lock in a mortgage, the sooner your home equity clock starts ticking. If you’re ready to become a homeowner, reach out to a lending professional to see what rate and loan type you can qualify for. If you need a trusted lender, I would be happy to help with a referral!