Last year, the Federal Reserve took action to try to bring
down inflation. In response to those efforts, mortgage rates jumped up rapidly
from the record lows we saw in 2021, peaking at just over 7% last October.
Hopeful buyers experienced 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 year’s peak. Sam Khater, Chief
Economist at Freddie 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.”
That’s potentially great news if you’re a buyer aiming to
jump back into the housing market. Any drop in mortgage rates helps boost your
purchasing power by bringing down your expected monthly mortgage payment. This
means the lower mortgage rates experts forecast this year could be just what
you need to reignite your homebuying goals.
While this opens up a window of opportunity for you,
remember: you shouldn’t expect rates to drop back down to record lows like we
saw in 2021. Experts agree that’s not the range buyers should bank on. Greg
McBride, Chief Financial Analyst at Bankrate, explains:
“I think we could be surprised at how much mortgage rates
pull back this year. But we’re not going back to 3 percent anytime soon,
because inflation is not going back to 2 percent anytime soon.”
It’s important to have a realistic vision for what you can
expect this year, and that’s where the advice of expert real estate advisors is
critical. You may be surprised by the impact even a mild drop in mortgage rates
has on your budget. If you’re ready to buy a home now, today’s market presents
the opportunity to get a more affordable mortgage rate, find your dream home,
and face less competition from other buyers.
The recent pullback in mortgage rates is great news – but if
you’re ready to buy now, holding out for 3% is a mistake. Work with a local
lender to learn how today’s rates impact your goals, and let’s connect to
explore your options in our area.