By Gay Cororaton, Chief Economist MIAMI REALTORS®
Mortgage rates decreased for the fifth consecutive week in the week of April 13 to 6.27%. I expect mortgage rates to decline to about 5.5% by December as inflation continues to slow to 3.5% by year-end and with the Fed more likely to do just one more 0.25% rate hike in May.[1] The decline in mortgage rates will save South Florida homebuyers about $50 to $240 in monthly mortgage payment.
The decline in mortgage rates comes at an opportune time as South Florida’s home sales accelerate from January through June before tapering in the second half. During 2017 through 2019, 52% of home sales occurred in the first half of the year. Because of Florida’s year-round sunny weather, sales can ramp up easily in the second half of the year, barring a bad hurricane season. During 2020, home sales surged in the second half of the year, making up for the lost sales in March through May as COVID-19 raged, with sales up 5.4% that year and with second half sales accounting for 60% of sales that year.
The decline in mortgage rates will save South Florida homebuyers about $50 to $240 per month in monthly mortgage payment.
In Miami-Dade County, the typical mortgage payment on a single-family home as of February 2023 was $3,079/month, based on 10% downpayment loan with a 6.26% mortgage rate. As mortgage rates decline towards 5.5% by year-end, and under the assumption that single-family home prices will rise at 5% in Miami-Dade County (single-family home prices rose 3.5% y/y as of February 2023), the monthly mortgage payment falls to $2,840 by December 2023, a savings of $238/month.
In Broward County, the monthly savings on a mortgage by December compared to February 2023 is $136/month. This assumes that home prices will increase at 10% year-over-year (single-family home prices rose 7.9% y/y as of February 2023).
In Palm Beach, the monthly savings on a mortgage by December compared to February 2023 is $132/month, assuming home prices increase 5% (single-family home prices rose 2.7% y/y as of February 2023).
In Martin County, the monthly savings on a mortgage by December compared to February 2023 is $53/month, assuming home prices increase 5% (single-family home prices rose 3.3% y/y as of February 2023).
