Key Takeaways
- Recent data gives us insight into mortgage rate forecasts
- Leaning on an expert agent can help you stay informed
- Linda Craft Team Realtors are your market experts in The Triangle!
If you’re staying up to date with the current housing market, you probably know that two of the biggest issues consumers face are mortgage rates and inflation. Let’s explore each:
The Housing Market And Inflation
This year, inflation hit a record high that has not been seen in 40 years. As a consumer, you’ve probably seen the impacts of this with even simple tasks, like filling your car with gas or buying lunch at the grocery store. Inflation may have even affected your ability to save money and buy a home.
While the Federal Reserve is currently tackling this inflation issue, the August data shows us that inflation rates were still higher than anticipated. This affects the stock market and has even initiated conversations and concern about a recession. Inflation has played a vital role in the Federal Reserve’s choice to raise the Federal Funds Rate recently. Bankrate states:
“. . . the Fed has raised rates again, announcing yet another three-quarter-point hike on September 21 . . . The hikes are designed to cool an economy that has been on fire. . .”
Their actions may not control what’s happening with mortgage rates, however they have contributed to the intentional alleviation of the housing market. An article from Fortune states:
“As the Federal Reserve moved into inflation-fighting mode, financial markets quickly put upward pressure on mortgage rates. Those elevated mortgage rates . . . coupled with sky-high home prices, threw cold water onto the housing boom.”
The Impact On Rising Mortgage Rates
Over the last few months, mortgage rates have been fluctuating. As of recently, the average 30-year fixed mortgage rate marked above 6% for the first time in over a decade, according to Freddie Mac (see graph below):
Increases in mortgage rates this year are a significant reason that buyer demand has backpedaled in recent months. Put simply, as rates and home prices rose, so did the cost of buying a home. These factors impacted overall affordability and even priced some buyers out of the market, so home sales began to slow down and the inventory of homes for sale increased as a result.
Where Will Rates And Inflation Go From Here?
According to experts, both of these factors will continue to impact the housing market as we go forward. A recent article from CNET explains the relationship between inflation and mortgage rates in basic terms:
“As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.”
Sam Khater, Chief Economist at Freddie Mac, says this about where rates may travel from here:
“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth. The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, . . .”
While there’s no way to entirely predict where mortgage rates will go from here, there’s lots that you can do to stay educated and informed. The most significant way to succeed in today’s market is relying on a trusted real estate advisor. Linda Craft Team Realtors possess more market knowledge than anyone in the area, and we’d love to give you guidance and answer questions you may have.
Bottom Line
Increased inflation and higher mortgage rates have had an impact on housing. For more insider knowledge on the latest housing market trends and what they mean for you, connect with us today!