Last year, the Federal Reserve took action to try to bring down inflation. In response to those efforts, mortgage rates jumped rapidly from the record lows in 2021, peaking at just over 7% last October. As a result, hopeful buyers experienced a hit to their purchasing power, and some decided to pause 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 lowering 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. Suppose you’re ready to get your own place in Chicago, Illinois.
In that case, today’s market presents the opportunity to get a more affordable mortgage rate, find your dream home, and face less competition from other buyers.
Bottom Line
The recent pullback in mortgage rates is great news – but waiting for a 3% is not a strategic move if you’re ready to launch your mortgage application and purchase now.
Work with a local lender to learn how today’s rates impact your goals, and let’s connect with real estate agents at KM Realty Group LLC, Chicago, Illinois, to explore your options in our area.
Related Posts:
- Lower Mortgage Rates Bringing Buyers Back to the Market
- US mortgage rates inch up slightly
- Long-Term Benefits of Homeownership
