If your house buying dreams have been on hold because of escalating interest rates, this might be your perfect time. Rates have decreased, and housing inventory is up to its highest level in years. Mortgage rates impact how much you can afford in your monthly mortgage payment. Mortgage rates have been trending down recently. While that’s good news for your homebuying plans, it’s important to know that rates can be unpredictable because they’re affected by many factors. Things like the economy, job market, inflation, and decisions made by the Federal Reserve all play a part. So, even as rates go down, they can still bounce around a bit based on new economic data.
How Do These Changes Affect You? When mortgage rates change, it affects how much you pay each month for your home loan. Even a small rate change can make a big difference to your monthly bill. Take a look at the chart below to see how different mortgage rates impact your house payment each month for various loan amounts. Imagine you can afford a monthly payment of $2,600 for your home loan. The green part in the chart shows payments in that range or lower based on varying mortgage rates (see chart below):
Understanding how mortgage rates impact your payment helps you make better decisions. Mortgage rates have had a big impact on housing affordability over the past couple of years. But there is hope on the horizon. Rates have actually started to come down. And, recently they hit the lowest point we’ve seen in 2024, according to Freddie Mac (see graph below):
And if you’re thinking about buying a home, that may leave you wondering: how much lower are they going to go? Here’s some information that can help you know what to expect.
Expert Projections for Mortgage Rates
Experts say the overall downward trend should continue as long as inflation and the economykeeps cooling. But as new reports come out on those key indicators, there’s going to be some volatility here and there. What you need to remember is it’s not wise to let those blips distract you from the larger trend. Rates are still down roughly a full percentage point from the recent peak compared to May. And the general consensus is that rates in the low 6s are possible in the months ahead, it just depends on what happens with the economy and what the Federal Reserve decides to do moving forward.
Most experts are already starting to revise their 2024 mortgage rate forecasts to be more optimistic that lower rates are ahead. For example, Realtor.com says:
“Mortgage rates have been revised slightly lower as signals from the economy suggest that it will be appropriate for the Fed to begin to cut its Federal Funds rate in 2024. Our yearly mortgage rate average forecast is down to 6.7%, and we revised our year-end forecast to 6.3% from 6.5%.”
Bottom Line
If you’ve put your moving plans on hold because of higher mortgage rates, it might be the right time to consider jumping back in. We are already seeing that rates have decreased in anticipation of the federal reserve meeting in September, where it is believed they will vote to decrease the interest rate. Give us a call to assist you in reentering the housing market with decreased rates, more inventory and multiple downpayment and closing costs programs.
Real Estate | Your@HomeTeam 