SAN JOSE, Calif. - Better days could be in store for home buyers and those looking to refinance an existing mortgage. Interest rates that had hovered around 8% are slowly dropping.
"So we are seeing a significant drop. Have you seen an impact in the market? I’m definitely getting the buzz," said Fif Ghobadian, a San Francisco-based mortgage lender with OriginPoint.
Ghobadian said the past week has been one to remember, specifically because the average lending rate for a 30-year fixed mortgage has gone down to just above 7%. That decrease, roughly one point, means it’s cheaper for people to buy homes, or refinance an existing mortgage.
For a Bay Area resident borrowing $800,000 to make a $1M purchase, the difference would mean a $400 savings each month on their mortgage payment.
"I’m getting clients who are calling. I’m definitely getting agents who are getting invigorated and excited about the fact that things are going in the right direction," said Ghobadian.
The economy’s steward, Federal Reserve Chairman Jerome Powell said Wednesday that the worst of the storm is over. For the third time this year, the Federal Reserve declined to increase the rate banks charge each other to lend money. And Powell said there could be as many as three rate cuts next year.
"Let me assure the American people that we’re fully committed to returning inflation to our two-percent goal," he said.
Experts said such sweet talk is tickling the ears of would-be buyers. There’s been a surge in mortgage applications over the past week, up 7.4%.
Still, some real estate agents say it’s still a long leap from applications to sold signs. That’s especially true for Santa Clara County residents. They are faced with extremely tight inventory and a $1.8M median price tag.
"We’ve only seen a minor increase in activity over the past 30 days. I wouldn’t call it significant yet. And I think that may be because of downward pressure from the holiday season," said Sandy Jamison, founder of Tuscana Properties, and past president of the Santa Clara County Board of Realtors. "I think as we get out of this holiday season and start to head into the new year, I’m definitely looking forward to having a really strong Spring buying market."
Powell believes the economy, with an inflation rate just above 3%, is healthy enough for him to release the breaks vis-à-vis interest rate hikes, and go forward with more reductions next year.
Jesse Gary is a reporter based in the station's South Bay bureau. Follow him on X (formerly Twitter), @JesseKTVU and on Instagram, @jessegontv