High inflation has contributed to higher mortgage rates. But as inflation falls from it’s peak, forecasts suggest the same might be true for mortgage rates.**
“Low inflation means low mortgage rates. Therefore, decelerating consumer prices could steadily lift home sales and increase home production in a few months,” Lawrence Yun, Chief Economist for the National Association of REALTORS®, said.
For homebuyers feeling stuck, this is encouraging news.
Though no one can guarantee where mortgage rates will land, the possibility of lower rates offers the possibility of a lower monthly payment. Homebuyers struggling to afford a house will see their buying power increase.
Even amidst affordability challenges, the outlook isn’t necessarily bleak. Mortgage rates remain below the historical average. The homeownership rate also continues to rise as the labor market holds steady.
To summarize: People are still buying houses. As Sam Khater, Freddie Mac’s Chief Economist, noted recently, “Despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year.”
Many buyers are using strategies like rate locks and Temporary Buydowns. A rate lock secures a mortgage rate for a set time to buffer market fluctuations, while a Temporary Buydown lowers a mortgage rate for the first few years of homeownership. Low and no down payment mortgages can also help to reduce or eliminate some of the upfront costs of buying.