When it comes to buying a home, one of the most important factors that affects your decision is mortgage rates. It’s no secret that mortgage rates have been on the rise over the past year, but when will they start going down? In this blog post, we’ll explore what you need to know about mortgage rates and when they might go down.Verify your mortgage eligibility (Dec 2nd, 2023)
What Affects Mortgage Rates?
Mortgage rates are determined by a few factors, including inflation, global economic activity, and the Federal Reserve. The Federal Reserve is responsible for setting short-term interest rates, which influence long-term interest rates like those for mortgages. When the Fed increases or decreases short-term rates, it has an effect on long-term rates. This can cause mortgage rates to go up or down.
Inflation also plays a role in determining mortgage rates; higher inflation means higher mortgage rates because lenders want to increase their returns as prices increase. Global economic activity is another big factor—when economies around the world are doing well, demand for loans increases and lenders may raise interest rates to compensate for increased risk of default on loans.
When Will Mortgage Rates Go Down?
Experts predict that mortgage rates will remain relatively steady over the next year or two due to low inflation and a healthy economy worldwide. That being said, there are still some unknowns in play that could cause mortgage rates to change in either direction. For example, if plans for tax reform pass Congress this year, it could lead to higher borrowing costs for individuals and businesses alike—which would result in higher mortgage interest rates as well. It’s also possible that rising tensions between North Korea and other countries could cause investors to become nervous and pull out of markets around the world—which could lead to lower loan demand and lower mortgage interest rate’s in turn.
Knowing what affects mortgage interest rates can help you make better decisions when looking at homes with different price tags or different loan terms. Ultimately, however, predicting where exactly mortgage interest rate will go is difficult at best because there are so many variables involved. The best plan of action is to monitor current trends and be prepared for changes as needed—and stay informed about how potential policy changes might impact your ability get a great deal on your home loan!Show me today's rates (Dec 2nd, 2023)