CONWAY, Ark. — It’s something that people nationwide have been wanting to hear for quite some time: a better opportunity to become a homeowner in 2024, thanks to a decline in mortgage rates.
“If you look at home ownership, it’s like one of the greatest drivers of just the entire GDP of the country and cause prices haven’t gone up,” Flat Branch Home Loans Senior Mortgage Banker Mark Phillips said. “Rates have gone down, so we may be in a bubble of affordability.”
Phillips said it’s no secret that it’s been a struggle for some people to purchase a home with mortgage rates at their highest levels in years.
“When you pair the value in the price of a house going up with rates topping out 8.25 percent, that starts to really make affordability hurt even for the people that make the most money and with the best credit,” Phillips said. “It’s still very hard for someone to get a mortgage at 8.25 percent that can really hurt your pocketbook.”
In October, rates hit 8.25 percent. Since then, they’ve started going down a bit, sitting around 7 percent, which Phillips said is a huge difference.
“October 2023 is where we saw peak rates at 8.25 percent, and let’s say you bought a house [that month],” Phillips said. “The average price around here for a home is maybe $225,000, and you put a 5 percent down payment, and then you did the same thing today. A couple of months later, we know rates have come down, things are looking better, you’re probably looking at somewhere around a seven, but as a general kind of average, we’re down a point to a point a quarter that’s over $200 difference in payment.”
According to Economist Jeremy Horpedahl, an associate professor of economics at the University of Central Arkansas, many people held off on purchasing a home when rates were high because it’s a long-term commitment.
“That one rate of 8 percent may seem like just one number, but that’s going to lock in for a long period of time, maybe 30 years,” Horpedahl said. “How much you’re going to have to pay every month.”
Horpedahl said that the drop in mortgage rates is due to a strong economy, things like positive job reports, and lower inflation, all of which could lead to some optimism for anyone looking to purchase a home.
“I think people have been pessimistic for a long time with good reason,” Horpedahl said. “I think in 2024, they’re going to see a lot of reasons to think the economy is getting better.”
Phillips said he hopes the decline of mortgage rates continues to become a downward trend.
“The more affordable they are, the better it is for everyone,” Phillips said. “We’re hoping they’ll continue to go down gradually.”
