The fallout from the regional bank collapses has led to tightening lending conditions, though not on residential mortgages. 

Mortgage rates continued to improve in the past week to an average rate of 6.28%, marking the fourth consecutive week of decline, according to Lawrence Yun, chief economist, for the National Association of Realtors. Compared to the recent 7% average rate peak, the latest rate saves $140 per month for a homebuyer on a $300,000 loan.

All mortgages have government guarantees, assuring an eager appetite to provide VA, FHA, and nearly all conforming mortgages to those homebuyers willing to stay within budget.  

Though week-to-week rate changes can move up and down, the longer-term prospect on rates is for further improvement, with a clear possibility of going under 6% by the year’s end.

This is because, with so much apartment construction, the new empty units steadily hitting the market will limit rent growth and calm overall consumer price inflation, according to Yun. The Federal Reserve can therefore stop tightening. With lower rates, more homebuyers will steadily appear. That is why it is critical to ensure more housing supply to help meet the recovering demand.