What to Expect for Mortgage Rates in the Near Future

Introduction

Recent headlines may leave you wondering what's next for mortgage rates. Maybe you'd previously heard there were going to be cuts this year that would bring rates down. That refers to the Federal Reserve (the Fed) and what they do to their fed funds rate. While cutting or lowering the Fed funds rate doesn't directly determine mortgage rates, it does tend to impact them. However, when the Fed met last week, a cut didn't happen, at least not yet. There are a lot of factors the Fed considered in their recent decision, and most of them are complex. But you don't need to be bogged down by those finer details. What you really want is the answer to this question: does that mean mortgage rates aren't going to fall? Here's what you need to know.

Expectations for Mortgage Rates

Mortgage rates are still expected to drop this year. While it hasn't happened yet, that doesn't mean it won't. Even Jerome Powell, the chairman of the Fed, says they still plan to make cuts this year, assuming inflation cools. He states, "We believe that our policy rate is likely at its peak for this tightening cycle, and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year." When this happens, history shows that mortgage rates will likely follow. That means hope isn't lost. According to a recent article from Business Insider, as inflation comes down and the Fed is able to start lowering rates, mortgage rates should go down too. This is positive news for those looking to buy a home or refinance their existing mortgage.

Timing the Market

But you don't necessarily want to wait for it to happen. Mortgage rates are notoriously hard to forecast, as there are so many factors at play and any one of those can change the projections as the economy shifts. That's why the experts offer this advice: don't try to time the market. Mark Fleming, Chief Economist at First Ameran, says, "While mortgage rate projections are just that - projections, not promises - and don't forget how hard it is to forecast them. So my advice is to never try to time the market. If one is financially prepared and buying a home aligns with your lifestyle goals, then it could be the right time to purchase. And there's always the refinance option if mortgage rates are lower in the future." Basically, if you're looking to move and trying to time the market, don't. If you're ready, willing, and able to move, it may still be worth it to do it now, especially if you can find the home you've been searching for. Instead of waiting for mortgage rates to drop, focus on your own financial readiness and personal goals.

Conclusion

In conclusion, while mortgage rates didn't experience a cut in the recent Fed meeting, it doesn't mean they won't fall in the near future. The expectation is that as inflation cools and the Fed starts lowering rates, mortgage rates will likely follow suit. However, attempting to time the market can be challenging and is not recommended. Instead, focus on your own financial preparedness and lifestyle goals when considering purchasing a home. If you're in the market for a home, it would be beneficial to connect with a professional who can keep you updated on mortgage rates and help you make the best decision possible. Thank you for reading!