Mortgage Rates Could Dip Below 6%

Amidst the market's current confusion regarding daily fluctuations in mortgage rates, here's the key takeaway: compared to the nearly 8% peak observed last fall, mortgage rates have shown an overall downward trend. This development holds significant implications for those considering buying or selling a home. Despite expected fluctuations influenced by factors like inflation and reactions to the consumer price index (CPI), it's crucial not to be overly distracted by short-term volatility. Experts concur that the broader downward trajectory is likely to persist throughout the year.

While the record-low rates experienced during the pandemic are unlikely to return, there's speculation among some experts that rates could dip below 6% later in the year. Dean Baker, Senior Economist at the Center for Economic Research, suggests, "They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards."

This sentiment is echoed by others in the field. The latest projections from Fannie Mae also suggest the possibility of rates dropping below 6% by year-end (refer to the green box in the chart below):

 a screenshot of a graph

The chart displays Fannie Mae's mortgage rate projections for 2024, featuring the forecast released in December alongside the updated forecast issued just a month later. A close examination reveals a downward trajectory in the projections.

While it's customary for experts to adjust their forecasts based on evolving market trends and the broader economic landscape, this trend indicates a growing confidence among experts that rates will likely continue to decline, contingent upon a cooling of inflation.

What This Means for You

Keep in mind, nobody can predict with certainty what will occur or when it will happen, and it's natural to encounter short-term fluctuations. Therefore, it's essential not to be unsettled by minor changes but instead to focus on the broader perspective.

If you've discovered a home that aligns with your preferences and budget in today's competitive market, particularly where finding such a home can be challenging, it might not be prudent to wait for rates to drop below 6%. Considering that rates are already lower than they were last fall, seizing the opportunity at hand is advisable. Even a slight decrease in rates, such as a quarter point, can significantly enhance your purchasing power.

Bottom Line

If you were contemplating a move last year but postponed it in anticipation of falling rates, now could be the opportune moment to take action. Reach out to a real estate agent to kickstart the process and capitalize on the current market conditions.


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