![]() ![]() Lenders only lend so long as the return on their loans will be high enough to offset any future decline in purchasing power. ![]() Of course, not everyone is in agreement about falling or even plateauing mortgage rates. (See the best mortgage rates you may qualify for here.) Prediction 3: But no one has a crystal ball, and it’s possible rates rise too. After all, community banks are suffering massively due to the sudden, big interest rate hikes of the past year,” says Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors (NAR). “Consumer price inflation is calming down … Therefore, consumer price inflation will look even better towards year end and may even provide an opportunity to consider cutting interest rates. We haven’t seen mortgage rates at those levels since September, and it could give the housing market a boost,” says Greg McBride, chief financial analyst at Bankrate. “If inflation continues to decelerate and the May rate hike is the Fed’s last, at least for a while, mortgage rates will move into the low 6’s, after having reached 6.6% in late April. (See the best mortgage rates you may qualify for here.) Prediction 2: It’s possible we’ll see rates in the low 6% range. Because this move is well anticipated, it should not cause a major shift in mortgage and other interest rates,” says Hale. ![]() The Fed meets early in the month and is widely expected to raise the policy rate by 25 basis points from its current 4.75-5% range to a 5% to 5.25% range. May could be a rocky month for mortgage rates. “After climbing from just over 3% to just over 7% in 2022, mortgage rates have occupied a narrower range in 2023, hitting a low just above 6% and nearing but not surpassing 7%. Danielle Hale, chief economist, also notes that mortgage lenders have already built in the predicted hike. Others say we might see rates stay at the status quo. If the central bankers indicate this might be their last rate hike, that news could spur a drop in mortgage rates,” says Kate Wood, home expert at NerdWallet. May kicks off with the Federal Reserve meeting and the likeliest scenario is a 25 basis point increase, which mortgage lenders have likely already incorporated into their interest rates. “Mortgage rates could plateau or head a little lower in May. Some say we might be looking at mortgage rate drops. Prediction 1: Mortgage rates could plateau or head a little lower. ![]()
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