Mortgage Rates are Dropping, but Think Twice if you are Waiting for 3%
As most would-be Sonoma County homebuyers know, the Federal Reserve acted last year to bring down inflation. As a result, mortgage rates rapidly increased from record lows in 2021 and peaked at a little over 7% in the fall. The rate increase caused a definite hit to the purchasing power of hopeful buyers and because of the changes, some decided to press the pause button on buying a home.
But there is emerging good news! Inflation is finally dropping, and mortgage rates have begun to respond.
Sam Khater, Chief Economist at Freddie Mac, shares:
“Inflationary pressures are easing and should lead to lower mortgage rates in 2023.”
This is great news if you are excited to get back into the market because with a boost in purchasing power, your monthly mortgage payment on a new home may be substantially lower. The lower rates forecasted for 2023 may be just what you need.
Beware. If you are waiting for rates to drop to 2021 levels, you’re going to be waiting for a long, long time.
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.”
However, a mild drop in interest rates, coupled with less competition may be the perfect recipe to secure your new home.
What have we learned
Lower mortgage rates are much-anticipated news, but waiting for 3% rates to return is a mistake. Call me now, your Sonoma County Realtor, to explore your options and learn how today’s rates affect your goals.