There's little debate that mortgage rates have had a significant impact on homebuying capacity over the past few years. However, there is some hopeful news: rates have actually started to decrease. According to Freddie Mac, mortgage rates have recently hit their lowest level of 2024.
If you're considering buying a home, you might wonder how much lower rates could go. Here’s some information on what to expect:
Expert Forecasts for Mortgage Rates
Experts suggest that if inflation and the economy continue to cool down, the overall downward trend in rates could persist. However, there will likely be temporary fluctuations with each new report on these key indicators.
It’s crucial to focus on the broader trend rather than getting swayed by short-term volatility. Currently, rates have dropped by about 1 percentage point from their recent peak. Most experts predict that, depending on economic conditions and future Federal Reserve decisions, rates could potentially fall to the low 6% range within the next few months.
Many experts are revising their 2024 mortgage rate forecasts to be more optimistic. For instance, Realtor.com has adjusted its average mortgage rate forecast to 6.7%, down from previous estimates, with the end-of-year forecast revised to 6.5% to 6.3%, following signals that the Fed might cut the federal funds rate in 2024.
What Should You Do in This Situation?
It’s wise to establish your own criteria for mortgage rates. If you’ve been postponing your decision in hopes of even lower rates, be aware that rates have already started to fall. You should decide when you want to re-enter the market based on expert forecasts and your budget.
According to Freddie Mac’s Chief Economist, Sam Khater, falling mortgage rates are likely to increase homebuyers' purchasing power and boost interest in moving. This means more demand could enter the market, potentially driving up prices again due to limited supply. Therefore, waiting indefinitely could actually increase your overall homebuying costs.
Ask yourself at what rate you’d be comfortable moving forward. It might be 6.25%, 6.0%, or even 5.99%. Determine your comfortable rate and once it’s reached, consult with a professional to start house hunting.
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