Uncategorized June 6, 2024

What’s Next for Mortgage Rates?

If you’re shopping for a new house, you may be hearing a lot about how high mortgage rates are. Well, here is some good news: They could start dropping soon. The next interest rate decision from the Federal Reserve (aka The Fed) is expected next week. 

Last month, The Fed left the Federal Funds Rate unchanged at 5.25%-5.50%.  That in turn kept the average rate for a 30 year fixed mortgage over  7%.  If you’re wondering why they’re two different numbers and what they mean for you… Here’s a quick primer and what to expect next.

The Fed

The Federal Reserve is holding its next policy meeting on June 11th and 12th. “This is the Fed’s next chance to trigger lower mortgage interest rates,” says Soila Columbie, Sales Associate at ERA Justin Realty, “They could stay the same, but at least they’re not expected to go any higher right now.” 

The Fed started raising the Federal Funds Rate in early 2022 in an effort to slow down the pace of inflation. “The Federal Funds Rate is how much it costs banks to borrow money from each other,” explains Jennifer Darby Metzger, Broker/Owner at ERA Justin, “The Fed’s decision on the Federal Funds Rate percentage doesn’t determine mortgage rates directly, but mortgage rates respond up or down when it changes.”

When Will Mortgage Rates Come Down?

“If it doesn’t happen next week, the overall consensus among experts is that mortgage rates should still come down this year, just later than originally expected” says Columbie, “But that doesn’t mean you should wait to buy.”

“Trying to time the market isn’t necessarily the best course of action,” adds Metzger, “If your ideal home is available right now, don’t stress about the economy. Interest rates change.You can always refinance when mortgage rates drop.  As we like to say: you date the rate but marry the house.”

Bottom Line

Whether you’re looking to buy your first home, upgrade to your next or downgrade to a smaller one but unsure how much you can afford due to mortgage rates, Soila Columbie or any of the knowledgeable agents at ERA Justin can help you figure it out. Give us a call at (201) 939-7500.