Rising mortgage rates over the past year have cooled the sizzling housing market. As home price growth has halted, fewer properties have sold over the past nine months than the month before. This is all because the average 30-year fixed mortgage rate has quadrupled this year, drastically restricting consumer ability to purchase a home. Additionally, this month the average interest rate for mortgages increased to almost 7% before falling to the high 6% level. However, we are beginning to have a glimpse of what mortgage interest rates could look like in the next year.
Effects of Inflation
We will continue to see higher mortgage rates as long as inflation is strong. Recently, there have been hints that inflation may be slowing down, providing us with a preview of what may come next. The mortgage market is anxiously anticipating good inflation data.
According to Zonda’s chief economist, Ali Wolf:
“As consumers, financial markets, and policymakers work through their issues in today’s economy, the housing market is anticipated to continue to experience volatility through 2023. . . . To confirm that mortgage rates have peaked, we are keeping an eye out for any further stability in the MBS market, indications of cooling inflation, and less aggressive Federal Reserve action.
Future of Mortgage Rates
We may anticipate a rise in mortgage rates as soon as we overcome the inflation problem and start to see that number decline. Over the previous few weeks, there have been hints of this. The Federal Reserve will lower mortgage rates as it attempts to reduce inflation.
Conclusion
Just a matter of time passing until mortgage rates decline. The expectation is that the inflation story will keep improving, lowering mortgage rates. This will increase the purchasing power of potential homebuyers and result in more people becoming homes nationwide.
The Real Estate Edge 