Mortgage Rates Are Dropping. What Does That Mean for You?

Mortgage interest rates have been a hot topic in the housing market over the past 12 months. Prices have increased dramatically compared to early 2022. Now they’re down, and it’s about everything that’s going on in the economy.

Nadia Evangelou, senior economist and forecast director for the National Association of Realtors (NAR), explains:

Mortgage rates dropped even further this week as two main factors affecting today’s mortgage market became more favorable. Inflation continued to ease while the Federal Reserve switched to a smaller interest rate hike. As a result, according to Freddie Mac, the 30-year fixed mortgage rate fell to 6.31% from 6.33% the previous week.”

What does this mean for your homeownership plan? Fluctuations in mortgage interest rates affect the cost of buying a home, which in turn affects purchasing power. Even small price reductions can help increase purchasing power. is how it works.The median home price is $379,100, according to the National Association of Realtors (NAR). For example, let’s say you want to buy a $4 million house. If you shop at that price and try to keep your monthly payments below about $2,500 to $2,600, you can shift your purchasing power as mortgage rates go up and down (see chart below). Red indicates payments above this threshold and green indicates payments within the target range.

This shows that even a quarter change in mortgage interest rates can affect monthly mortgage payments. That’s why it’s important to work with a real estate expert you trust to keep track of their expert mortgage rate predictions for the days, months, and years to come.

Bottom Line

Mortgage rates, which may fluctuate depending on how inflation progresses, have fallen slightly in recent weeks. If the 7% interest rate is too high, it may be time to contact your lender to see if the current interest rate is a better fit for your monthly housing cost goals.

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Tue, 20 Dec 2022 11:56:44 +0000

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