Mortgage Rates Fall For Fifth Straight Week, And Wharton Professor Jeremy Siegel Expects A Slide In Prices Too
As the Federal Reserve increased its benchmark borrowing rate for the seventh time this year and hinted that there would be more increases in 2023, the average long-term mortgage rate in the United States decreased for the fifth consecutive week.
What Happened: According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 6.31%, down from 6.33% in the previous week. The 30-year FRM averaged 3.12% a year ago.
The average rate for a 15-year fixed-rate mortgage dropped to 5.54% from 5.67% last week. The 15-year FRM averaged 2.34% a year ago.
So, is it time to buy? Maybe not.
Home prices are still inflated at historic levels, and Jeremy Siegel, Wharton Professor of Finance, may be signaling to wait even longer.
"I expect housing prices fall 10% to 15%, and the housing prices are accelerating on the downside," Siegel told CNBC in a recent interview, noting that housing prices by any indicator are going down.
Why It Matters:In a separate interview with CNBC, Siegel said, "I think we're gonna have the second-biggest housing price decline since post-WWII period over the next 12 months. That's a very, very significant factor for wealth [and] for equity in the housing market."
Given that the reverse in rates is what caused home prices to start rising in the first place, the professor is likely advocating for a decline in home prices as interest rates rise.
Low borrowing rates have been a major factor in home price growth over time, particularly in recent years. When interest rates fall, it becomes less expensive to finance a home, which encourages more would-be homeowners to buy real estate.
In addition to the fact that there is currently a supply-side issue contributing to those inflated costs, this rise in demand usually invariably raises overall property prices.
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