After Weeks Of Decreasing, Mortgage Rates Have Risen Again
The last year has been quite a difficult market for homebuyers to navigate. Increasing inflation, surging demand, and doubling mortgage rates have successfully priced out quite a few prospective buyers and cemented 2022 as a strong seller's market. Thankfully, over the last few weeks, the Federal Reserve finally began easing interest rate increases, showing signs of a less tumultuous market to come in the following months.
Increasing interest rates is one of the Federal Reserve's main strategies to slow inflation. If fewer people are borrowing money to spend, there's decreased demand for goods across the board, but in a corner of the market as dependent on loans as housing, these decisions have a major impact. Following a historic hike in rates, the Federal Reserve began paring back its strategy after seeing some positive effects on the cost of goods, foreshadowing a sunnier future for buyers in 2023. This week, however, they interrupted their six-week-long trend of decreases with yet another hike in mortgage rates.
The increase and what it means
According to Freddie Mac, rates on a 30-year fixed mortgage increased from 6.27% to 6.42% last week. While this certainly isn't ideal if you're in the market to buy, it shouldn't be a reason to panic, either. Demand for housing typically dips around the holidays anyway, and even with a slight increase, the impacts are nowhere near as striking as earlier in the year. As more and more buyers continue to be priced out of purchasing homes, demand is falling, and so will prices.
If the market follows the current predictions, rates should be much more reasonable in the latter half of 2023, and an increased number of homes on the market will put an end to the currently cutthroat competition when it comes to finding affordable housing. We're not out of the woods quite yet, but it's clear that we're through the worst of the mortgage rate increases and can expect some cooling off soon enough.