If you need assistance, please call 703-743-4410

Mortgage Rates Are Dropping. What Does That Mean for You?

Friday, December 23, 2022   /   by Laura Larson

Mortgage Rates Are Dropping. What Does That Mean for You?

b1.jpg

Over the past 12 months, the housing market has seen a lot of discussion about increasing mortgage rates. Rates have significantly gone up compared to the start of 2022. But now they are now declining, and this decline is related to everything that is taking place in the economy.

Nadia Evangelou succinctly expresses it as follows: “Mortgage rates dropped even further this week as two main factors affecting today’s mortgage market became more favorable. Inflation continued to ease while the Federal Reserve switched to a smaller interest rate hike. As a result, according to Freddie Mac, the 30-year fixed mortgage rate fell to 6.31% from 6.33% the previous week.”

What does that mean for your plans to purchase a home?
Mortgage rates change throughout time, which has an effect on your ability to buy a home by changing the monthly costs of buying a property. Your purchasing power can be increased even with a slight decline. This is how it goes.

The National Association of Realtors (NAR) estimates that the median price of a home is $379,100. Let's say you want to purchase a $400,000 house. When shopping at that price range, you should attempt to keep your monthly payment at $2,500 to $2,600 or less, hence the importance of monitoring decreases in interest rates, as they can make the difference in affordability. 

Monthly mortgage payments can be affected by even a tiny quarter-point fluctuation in interest rates. Working with a reputable real estate agent who keeps track of what industry experts are predicting for mortgage rates in the coming days, months, and years is crucial and will make your dream of home ownership a reality.

Bottom Line
Mortgage rates have recently decreased, but they are likely to keep fluctuating in the future depending on what happens with inflation. It could be time to speak with an experienced realtor such as Laura Larson who can recommend great local lenders to determine how much house you can afford.