fbpx

News & Events

Mortgage Rates Will Come Down, It’s Just a Matter of Time

This past year, rising mortgage rates have slowed the red-hot housing market. Over the past nine months, we’ve seen fewer homes sold than the previous month as home price growth has slowed. All of this is due to the fact that the average 30-year fixed mortgage rate has doubled this year, severely limiting homebuying power for consumers. And, this month, the average rate for financing a home briefly rose over 7% before coming back down into the high 6% range. But we’re starting to see a hint of what mortgage interest rates could look like next year.

Inflation Is the Enemy of Long-Term Interest Rates

As long as inflation is high, we’ll see higher mortgage rates. Over the past couple of weeks, we’ve seen indications that inflation may be cooling, giving us a glimpse into what may happen in the future. The mortgage market is eagerly awaiting positive news on inflation. As Ali Wolf, Chief Economist at Zondasays:

The housing market is expected to face continued uncertainty heading into 2023 as consumers, financial markets, and policymakers work through their respective challenges in today’s economy. . . . 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.”

What Does This Mean for the Future of Mortgage Rates?

As we get through the inflation battle and start to see that coming down, we should expect mortgage rates to follow. We’ve seen nods of this over the past couple of weeks. As the Federal Reserve works to bring inflation down, mortgage rates will come down as well. Bill McBride from Calculated Risk says:

My current view is inflation will ease quicker than the Fed currently expects.”

As we look toward next year, we certainly hope he’s right.

Bottom Line

Mortgage rates will come down – it’s just a matter of time. The hope is we continue to see more positive news on inflation, and that’ll bring mortgage rates down. This will give prospective homebuyers more buying power and lead to more homeowners throughout the country.

Share This Post

Keep Reading

What Buyers Need To Know About the Inventory of Homes Available for Sale

  If you’re thinking about buying a home, you’re likely trying to juggle your needs, current mortgage rates, home prices, your schedule, and more to try to decide if you want to jump into the market. If this sounds like you, here’s one key factor that could help you with your decision: there are more homes for sale today than there were at this time last year. According to Calculated Risk, for the week ending in November 18th, there were...

Read More

Tamra's Tips: Advantages of a 2-1 Buy Down for Sellers and Buyers

A Temporary rate buydown loan is just as it sounds. The interest is temporarily bought down using seller concessions for years 1 and 2 of the loan. Year 1 is the lowest, with rates rising in year 2 and then settling at the original market rate for year 3.   In our current rate environment, the 2-1 Buydown is a great mortgage option for buyers and sellers; here’s why: Seller: Buydown is paid through seller concessions...

Read More