The housing market's 'magic mortgage rate' is proving elusive

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After hitting a 16-month low of 6.11% in early September, the average 30-year fixed mortgage rate tracked by Mortgage News Daily has ticked back up, reaching 6.62% on Tuesday.

That increase will likely dampen refinancing activity, which had started to gain a bit of momentum as some borrowers with 7% and 8% rates took the opportunity to get some relief.

According to a new survey by John Burns Research and Consulting (JBREC), neither the 6.11% rate nor today’s 6.62% was going to do too much to unlock homeowners who’d like to sell and buy something else, however, given current rates, are staying put.

At what mortgage rate level would resale turnover—currently hovering at multi-decade lows—really pick up?

The "magic mortgage rate" that JBREC says would truly unlock the market is below 5.50%. They’ve held this view for a while and reaffirmed it last week, citing their September 2024 survey👇

13% —> The share of homeowners surveyed by JBREC who would accept a mortgage rate between 6.5% and 6.99% on their next home.

47% —> The share of homeowners surveyed by JBREC who would accept a mortgage rate between 5.0% and 5.5% on their next home.

Why have mortgage rates bounced up over the past week?

The latest employment reports have come in a bit warmer than expected, with the U.S. unemployment rate falling from 4.3% in July 2024 to 4.1% in September 2024. After rising from the cycle low of 3.4% in April 2023 to 4.3% in July 2024, some analysts were concerned this could signal a sharp labor market slowdown or recession. However, the latest jobs numbers have eased those fears somewhat and placed a little upward pressure on long-term yields, including mortgage rates.

Over the past week, ResiClub PRO members (paid tier) got these 3 additional research articles.

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