A mortgage rate is an interest charged on a monthly mortgage payment. The higher the rate, the more money you’ll need to set aside each month to cover the bill.
Mortgage rates also impact the future of your home buying/selling journey as they can determine what you can and cannot afford. The combination of both factors is often referred to as buying power.
As we look at the expert forecasts, you’ll notice that mortgage rates are starting to level off again, which is a good sign for the industry as a whole.
What to Expect
While the real estate market tends to move through waves of highs and lows, the near future looks to be stable. We can expect low to mid 5% rates that eventually dip down even lower. With the inflation growth, buyers have understandably been hesitant to jump into the market, fearing that significant hikes will continue.
How Mortgage Rates are Predicted
You may wonder how mortgage rates are predicted months ahead when a feeling of uncertainty in the market can loom for periods. Professionals consider the trends surrounding the overall economy and expected changes in the industry.
The following factors also play into the forecast.
Economic Conditions
The economy as a whole will speak to whether mortgage rates climb or remain low. Factors such as overall country unemployment will cause low rates in an attempt to stimulate borrowing. Any signs of trouble or economic expansion will also impact the fluctuation of rates.
When prices remain elevated, mortgage rates increase as well. Although not directly correlated, inflation and mortgage rates move in tandem to stabilize economic activity. Real estate professionals take the time to monitor economic conditions to come up with an overall assessment of future stability.
Credit Score and Down Payment
Setting your housing goals in an ever-evolving industry can be frustrating, but the good news is that there are factors that are entirely in your control.
These factors include credit score and down payment.
Your credit score and down payment amount will carry heavy weight into the mortgage rate received. Generally, individuals with higher credit scores are deemed a safer bet to pay back the loan, thus granting a lower rate. Ultimately, the higher the score, the lower the rate.
A high down payment will allow for a lower mortgage rate too. The borrowing exchange is less risky since the buyer has placed more stake in the property. Additional insurance may also be required with a small down payment, resulting in a higher monthly mortgage.
What to Expect in Upcoming Months
Experts are providing buyers with the confidence to move forward in their home-buying journey. The rates won’t stay high forever, meaning that those seeking to buy a home will be able to do so at a lower interest rate in the future.
There will always be a certain level of uncertainty in the real estate markets, and trends can go awry, but professionals will be the first ones to call out any changes in predictions or forecasts.
If hesitation is still on your mind, reach out to a real estate professional to walk you through options during this time. Melody Smith and Associates is a longtime leading broker associate in South Orange County, known for super service, and is in the top 1% of 1% of agents in the country. Please contact us for all of your real estate needs. 949-401-7033.
