The 2022 housing market can easily be defined by two things: inflation and rising mortgage rates. These two things have put the market into a reset position. As the Federal Reserve made moves
Mortgage Rates Are Dropping. What Does This Mean For You?
Dated: December 20 2022
Mortgage rates have been a hot topic in the housing market over the past year. In the beginning of 2022, rates were rising dramatically. Now, they are dropping, and that has everything to do with the economy.
Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), explains it well by saying:
"Mortgage rates dropped even further this week as two main factors affecting today's mortgage market became more favorable. Inflation continued to ease while the Federal Reserve switched to a smaller interest rate hike. As a result, according to Freddie Mac, the 30-year fixed mortgage rate fell to 6.31% from 6.33% the previous week."
What does this mean for your homeownership plans? As mortgage rates fluctuate, they impact your purchasing power as a buyer by influencing the cost of buying a home. Even a small dip can help boost your purchasing power. Here is how it works:
According to the National Association of Realtors (NAR) the median price of homes is $379,100. Let's assume you want to buy a $400,000 home. If you are trying to shop at that price point while keeping your monthly payment about $2,500-$2,600 or below, here is how your purchasing power can change as mortgage rates move up or down (see chart below). The red boxes show payments above that threshold and the green boxes indicate a payment within your target range.
This goes to show, even a small quarter-point change in mortgage rates can impact your monthly mortgage payment. That is why it is so important to work with a trusted real estate professional who follows along with what the experts are projecting for mortgage rates for the days, months, and year ahead.
Mortgage rates are likely to keep on fluctuating depending on what happens with inflation moving forward, but they have dropped slightly in recent weeks. If a 7% rate was too high for you, it may be time to contact a trusted local lender to see if the current rate is more in line with your goal for a monthly housing expense.
Latest Blog Posts
Mortgage rates have been a hot topic in the housing market over the past year. In the beginning of 2022, rates were rising dramatically. Now, they are dropping, and that has everything to do with