Will Mortgage Rates Go Down?
Will Mortgage Rates Go Down?
Rising mortgage rates over the past year have cooled the sizzling housing market. Fewer properties have sold over the past nine months than the month before as home price growth has halted.
This is all because the average 30-year fixed mortgage rate has quadrupled this year, drastically restricting consumer ability to purchase a home. Additionally, this month the average interest rate for mortgages momentarily increased to almost 7% before falling down to the high 6% level.
However, we are beginning to have a glimpse of what mortgage interest rates could look like in the next year.
Also Read: Do We Find Ourselves In a Housing Bubble?
The enemy of long-term interest rates is inflation
We will continue to see higher mortgage rates as long as inflation is strong. Recently, there have been hints that inflation may be slowing down, providing us with a preview of what may come next. The mortgage market is anxiously anticipating good inflation data. According to Zonda’s chief economist, Ali Wolf:
“As consumers, financial markets, and policymakers work through their respective challenges in today’s economy, the housing market is expected to face continued uncertainty heading into 2023…. we are watching for any additional stability in the MBS market, signs of cooling inflation, and/or less aggressive Federal Reserve action to give us confidence that mortgage rates are past their peak.”
Also Read: Whats a Short Sale in Real Estate?
How Will This Affect Future Mortgage Rates?
We may anticipate a rise in mortgage rates as soon as we overcome the inflation problem and start to see that number decline. Over the previous few weeks, there have been hints of this. The Federal Reserve will lower mortgage rates as it attempts to reduce inflation. According to Bill McBride of Calculated Risk:
“In my present opinion, inflation will decline more quickly than the Fed anticipates right now.”
We surely hope he is correct as we look ahead to the following year.
Also Read: Property Seller Disclosure: What is Property Seller Disclosure?
Conclusion
Just a matter of time will pass until mortgage rates decline. The expectation is that the inflation story will keep getting better, which will lower mortgage rates. This will increase the purchasing power of potential homebuyers and result in more people becoming homes nationwide.
