Last year, theFederal Reservetook action to try to bring down inflation. In response to those efforts,mortgage ratesjumped up rapidly from the record lows we saw in 2021, peaking at just over 7%last October. Hopefulbuyersexperienced a hit to their purchasing power as a result, and some decided to press pause on their plans.
Today, the rate of inflation is starting to drop. And as a result, mortgage rates have dipped below last years peak. Sam Khater, Chief Economist atFreddie Mac,shares:
While mortgage market activity has significantly shrunk over the last year,inflationary pressures are easing and should lead to lower mortgage rates in 2023.
Thats potentially great news if youre abuyeraiming to jump back into the housing market. Any drop in mortgage rates helps boost yourpurchasing powerby bringing down your expected monthly mortgage payment. This means the lower mortgage ratesexpertsforecastthis yearcould be just what you need to reignite your homebuying goals.
While this opens up a window of opportunity for you, remember: you shouldnt expect rates to drop back down to record lows like we saw in 2021. Experts agree thats not the range buyers should bank on. Greg McBride, Chief Financial Analyst atBankrate,explains:
I think we could be surprised at how much mortgage rates pull back this year. Butwere not going back to 3 percent anytime soon, because inflation is not going back to 2 percent anytime soon.
Its important to have a realistic vision for what you can expect this year, and thats where the advice of expertreal estateadvisors is critical. You may be surprised by the impact even a mild drop in mortgage rates has on your budget. If youre ready tobuy a homenow, todays market presents the opportunity to get a more affordable mortgage rate, find your dream home, and faceless competitionfrom other buyers.
Bottom Line
The recent pullback in mortgage rates is great news but if youre ready to buy now, holding out for 3% is a mistake. Work with a local real estate expert to explore the options in your area and learn how todays rates impact your goals.
When you are ready to buy or sell your next home, please call me, Marie McLaughlin 727-858-7569.
