Part 3/9:
The immediate effect of the rate decline is increased optimism among prospective homebuyers, who see lower borrowing costs as an opportunity to enter or expand within the housing market. Historically, even a modest decrease in rates can stimulate demand, as buyers are motivated by perceived savings on monthly payments.
However, LaRose warns that this relief may be short-lived if the economic data shifts unexpectedly. He indicates that for mortgage rates to drop further into the 5.8%-5.9% range, the economy would need to show signs of slowing down significantly, such as weaker job reports or economic indicators pointing toward a slowdown. Until then, he suggests that optimistic buyers might want to hold off on rushing into purchases, expecting rates to trend downward further.