It's still difficult for many buyers, particularly those looking for their first home, to afford a monthly payment. "Even though home prices in many parts of the country have fallen since the start of the year, high rates make buying prohibitively expensive for many," says Jacob Channel, senior economist at loan marketplace LendingTree. Fewer buyers are willing to jump into the housing market, driving demand down and causing home prices in some regions to ease, but that's only part of the home affordability equation. However, mortgage rates remain well above where they were a year ago. "If inflation keeps coming down, that will be the biggest driver, outside of the Fed, that's really going to help bring rates down to a better level and improve affordability for home buyers," says Scott Haymore, head of capital markets and mortgage pricing at TD Bank. While the central bank is unlikely to cut rates any time soon, positive signaling from the Fed and cooling inflation may ease some of the upward pressure on mortgage rates. The decision to hike by 0.25% on May 3 suggests that inflation is cooling and the central bank may soon be able to pause its rate hiking regime. Overall, inflation remains high but has been slowly but consistently falling every month since it peaked in June 2022.Īfter raising rates dramatically in 2022, the Fed opted for smaller, 25-basis-point rate increases in its first three meetings of 2023. While rates don't directly track changes to the federal funds rate, they do respond to inflation. "Ultimately, more certainty about the Fed's actions will help to smooth out some of the volatility we have seen with mortgage rates," says Odeta Kushi, deputy chief economist at First American Financial Corporation. Throughout March and April, rates fluctuated in the 6% range. Rates dipped significantly in January before climbing back up in February. Mortgages hit a 20-year high in late 2022, but now the macroeconomic environment is changing again. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates. By entering your information below, you can get a custom quote from one of CNET's partner lenders.Ībout these rates: Like CNET, Bankrate is owned by Red Ventures. Experts recommend shopping around to make sure you're getting the lowest rate. Depending on incoming inflation data, the next step would be to hold rates where they are for an extended period of time in order to bring inflation down to its 2% target.Īs long as inflation continues to trend downward, experts say a pause in rate hikes from the Fed could bring some stability to today's volatile mortgage rate market. The central bank has signaled that it may soon be time to pause on rate hikes. The Fed's May meeting marks what could be the last increase we see for the time being. On the heels of cooling inflation, the Federal Reserve announced on May 3 a 25-basis-point increase to its benchmark short-term interest rate. We also saw an increase in the average rate of 5/1 adjustable-rate mortgages. The average interest rates for both 15-year fixed and 30-year fixed mortgages both were driven higher. A variety of important mortgage rates saw growth over the last seven days.
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