Mortgage Rates Will Come Down, It’s Just a Matter of Time
This past year, rising mortgage rates have slowed the red-hot housing market. Over the past nine months, we’ve seen fewer homes sold than the previous month as home price growth has slowed. All of this is due to the fact that the average 30-year fixed mortgage rate has doubled this year, severely limiting home-buying power for consumers. And, this month, the average rate for financing a home briefly rose over 7% before coming back down into the high 6% range. But we’re starting to see a hint of what mortgage interest rates could look like next year.
As long as inflation is high, we’ll see higher mortgage rates. Over the past couple of weeks, we’ve seen indications that inflation may be cooling, giving us a glimpse into what may happen in the future. The mortgage market is eagerly awaiting positive news on inflation. As Ali Wolf, Chief Economist at Zonda, says:
“The housing market is expected to face continued uncertainty heading into 2023 as consumers, financial markets, and policymakers work through their respective challenges in today’s economy. . . . we are watching for any additional stability in the MBS market, signs of cooling inflation, and/or less aggressive Federal Reserve action to give us confidence that mortgage rates are past their peak.”
As we get through the inflation battle and start to see that coming down, we should expect mortgage rates to follow. We’ve seen nods of this over the past couple of weeks. As the Federal Reserve works to bring inflation down, mortgage rates will come down as well. Bill McBride from Calculated Risk says:
“My current view is inflation will ease quicker than the Fed currently expects.”
As we look toward next year, we certainly hope he’s right.
Mortgage rates will come down – it’s just a matter of time. The hope is we continue to see more positive news on inflation, and that’ll bring mortgage rates down. This will give prospective homebuyers more buying power and lead to more homeowners throughout the country.
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Median sale prices in the East Bay have fallen for six months straight.
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Single-family home median sale prices rose by 4.42% on a year-over-year basis, while condo median sale prices rose by 10.52%. Additionally, the average single-family h… Read more
Single-family inventory levels are 20.05% higher on a year-over-year basis, and condo inventory levels are 13.15% higher.
Although many markets have seen a downtrend in pricing, San Francisco has remained incredibly resilient.
Although prices have been incredibly resilient in the East Bay, the future of this stability is very uncertain, as inventories have been growing at a tremendous rate.
Single-family homes continue to be a hot commodity, while condos continue to sit on the market.
Inventory levels are increasing drastically throughout the entire East Bay, with the area seeing over 40% more active listings than this time last year.
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