Mortgage lenders "inundated" in Utah's tight housing market as Fed cuts rates
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Utah home buyers are uniquely positioned to benefit from the Federal Reserve's significant interest rate cut this week as mortgage rates continue to fall.
The intrigue: Utah's housing market has been exceptionally hamstrung because homeowners here enjoy some of the lowest rates in the nation, with about three-quarters paying less than 4% for a 30-year fixed mortgage.
- With rates above 6% for the past two years, homeowners haven't been able to upsize or downsize without taking a bath — and that reluctance to sell has further locked up Utah's already-scarce housing supply.
By the numbers: Mortgage rates shot to nearly 7.8% last November and stayed above 6.5% until August, when they began to fall in anticipation of the Federal Reserve's promised cut.
- As of Thursday, rates were down to 6.09% — a full percentage point lower than in April and May.
- For new buyers, that adds up to a cost reduction of about $300 a month for a typical Salt Lake home.
State of play: Prospective buyers are finally feeling less skittish, Utah realtors told Axios.
- "The mortgage lenders are being inundated right now," said Dave Anderton, spokesperson for the Salt Lake Board of Realtors. "Now that rates are coming back down into the 6%, or in the high 5 [percent range], people are saying, 'Well, maybe we can afford that.'"
- Others are looking to refinance after buying while mortgage rates were higher.
Zoom in: Lower mortgage rates might normally prompt sellers to raise prices — but that's unlikely because inventory is rising, too, with about 20% more homes on the market in Utah than at this time last year, Anderton told Axios.
What they're saying: "When rates lower, it also benefits homebuilders and developers," said Adam Kirkham, president of the Utah Association of Realtors.
- "So a lot of those projects that we need … to create more housing will become more affordable for those that build. That's another byproduct: We should see a little bit more movement with new housing throughout the state."
What we're watching: Whether mortgage rates continue to fall as predicted, with further interest rate cuts on the horizon.
- Rates may never get back below 4%, but the 5%-6% range likely will become realistic in coming weeks and months, Anderton predicted.