Last year, the Federal Reserve attempted to decrease inflation, but it resulted in a rapid increase in mortgage rates from record lows in 2021, peaking at just over 7% in October. This caused some potential buyers to pause their plans. However, the inflation rate is starting to decrease, leading to a drop in mortgage rates below last year’s peak. This could be good news for buyers aiming to get back into the housing market as it increases their purchasing power by lowering their expected monthly mortgage payments.
It is important to note that buyers should not expect rates to drop back down to the record lows seen in 2021. Experts agree that it is not a range buyers should rely on. Even though we could be surprised by how much mortgage rates pull back this year, it is unlikely that rates will go back to 3% anytime soon because inflation is expected to return to 2% sometime soon.
Having a realistic vision of what to expect this year is crucial, and seeking advice from expert real estate advisors can be helpful. Even a slight drop in mortgage rates can significantly impact one’s budget. If you are ready to buy a home now, today’s market presents an opportunity to get a more affordable mortgage rate, find your dream home, and face less competition from other buyers.
To sum up, the recent pullback in mortgage rates is good news. Still, instead of holding out for 3%, working with a local lender to understand how today’s rates affect your goals and explore your options in your area is advisable.