Mortgage rates have fallen, with the 30-year fixed rate mortgage dropping to 6.61% and the 15-year FRM dropping to 5.93%. With mortgage rates coming off their highs, many on Wall Street are hopeful that the housing market can begin to turn around. Melissa Cohn, William Raveis Mortgage Regional Vice President joins Yahoo Finance to give insight into these movements and the future of the housing market going forward.

Cohn explains why home buying may still be slow: "I think people are taking their time, especially with the sense that mortgage rates are going to continue to come down over the course of the next two years. There's no urgency because we haven't seen the bottom yet." She continues on to say "I think when mortgage rates come down to like a 5.5%, then people will start to think about perhaps it's time to sell...We also have to remember the people move through life cycles. People get married, they have children, they get divorced, their kids move out of the house. people die, so those people are always in the real estate market, but there's just not enough inventory, because people don't want to give up the low rates. "

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- Well, it's a busy day for housing news. Mortgage rates falling in the latest week, now hovering at 6.61%. And it comes as we learn pending home sales held at a record low level in November. Joining us now is Melissa Cohn, William Raveis mortgage. Regional Vice President. Thanks for being here, Melissa. Now--

MELISSA COHN: My pleasure.

- When do we start to see more of an effect from these falling mortgage rates here?

MELISSA COHN: Well, I think certainly after the holidays. We've been quite the year, and I think a lot of people are enjoying the Christmas New Year's holiday, and we'll really get back to the business of real estate business and other business after the new year. We had that point in time where rates were so low and people had to scramble to buy a property because it's on the market, and if you don't buy it now it's going to be gone.

And then that changed. And people have more time now to look at a home and think about it, and make a decision after seeing five homes or 10 homes. And I think people are taking their time, especially with the sense that mortgage rates are going to continue to come down over the course of the next two years. There's no urgency because we haven't seen the bottom yet.

- So Melissa, to your point, I'm looking at the 30-year fixed here, according to Mortgage News daily we're back to 6.63. I'm interested Melissa, though, so obviously we're off those highs. But in order for this market to start working again, we also need to see just more supply. What does inventory look like right now, Melissa, and what do you expect in the months ahead?

MELISSA COHN: There's a total dearth of inventory. People, the majority of this country own mortgages with rates that are below 5%, many below 4% even at 3%, and those people are not ready to move. They don't want to go from a 3% rate into a 6% rate environment. I think when mortgage rates come down, let's say get down to like a 5.5%, then people will start to think about perhaps it's time to sell, take advantage of all the equity that they've built in their homes over the course of the past few years.

We also have to remember that people move through life in cycles. People get married, they have children, they get divorced, the kids move out of the house, people die. So those people are always in the real estate market, but there's just not enough inventory because people don't want to give up their low rates.

- Yeah, Melissa, obviously you're in the mortgage business. And as you know, it feels like arms, adjustable rate mortgages, really got a bad wrap post-financial crisis. Are we going to see a comeback of those types of loans here, because people are going to be anticipating that rates are going to fall?

MELISSA COHN: So a lot of people do take adjustable rate mortgages, but they're a little bit harder to qualify for. And now with the way rates have dropped, some of them are not significantly lower than what a 30-year fixed rate is today. But if you can find an adjustable rate where that rate is 3%, 3/4 of a percent lower than the rate on a fixed rate, so if you can find an adjustable rate at six or in the high fives, you may want to consider taking that today if you can qualify, because interest rates, as I've said, are going to continue to come down and people are going to end up refinancing the mortgage that they have today over the course of the next two years.