CURRENT RATES AND HISTORICAL PERSPECTIVES

By Maggie Levin

In the world of real estate, few factors hold as much sway over the decisionmaking process as mortgage rates. Whether you’re an experienced investor or firsttime homebuyer, understanding what the mortgage rates are, as well as what is in the forecast, is crucial. Additionally, understanding how mortgage rates work and how they can impact your financial landscape is equally as important.

At the time of publishing, the average mortgage rates were ranging from 5.99% for both 10- and 15-year terms up to 7.06% for a 30-year fixed Jumbo. These particular rates are up from just last week across the board, but what most people are continuing to ask is, “What is the future of mortgage rates?” While nothing is set in stone, experts and market watchers have predicted that rates will see a few cuts and hover around 6% and even potentially dip into the high 5% range by the end of 2024. While it has been stated that the days of 3% interest rates may not be back for a while, today’s rates are still considered historically low compared to years past. In fact, from 1976 to 2009, rates didn’t dip below 5%, with some years seeing 8%, 10%, 12% even 16% (in 1981) for the average 30-year rate. It wasn’t until 2010 that we saw a 4% rate. So what influences mortgage rates? There are a lot of factors but the primary ones are outlined below:

Economic conditions: The overall health of the economy is closely tied to mortgage rates. When there are periods of low unemployment and an increase in economic growth, mortgage rates tend to rise with the demand of those seeking loans. During economic downturns, mortgage rates can decrease as central banks implement monetary policies to stimulate the economy and get consumers borrowing and spending again.

Central bank policies: Speaking of central banks, they play a massive role in mortgage rates and shaping what those look like through their monetary policy decisions. When they adjust benchmark interest rates and engage in open market operations, central banks influence the cost of borrowing and the overall liquidity of the financial system, which in turn impacts mortgage rates.

Inflation expectations: This factor plays a crucial role in determining mortgage rates. Lenders consider expected inflation when establishing interest rates, as inflation gradually diminishes the purchasing power of currency. Anticipated higher inflation rates may prompt lenders to seek higher interest rates to offset the expected decline in the future value of loan repayments.

Housing market conditions: The interplay between supply and demand in the housing market can also impact mortgage rates. In regions experiencing high demand and limited housing inventory, lenders may lower rates to entice borrowers. Conversely, in areas with excess supply or dwindling demand, lenders might increase rates to manage risk.

Given that mortgage rates are influenced by a multitude of factors, it is so important for consumers to stay informed about not only the current market trends, but also the economic indicators that could impact borrowing costs. The best way to do that is by watching inflation rates, central bank announcements and employment figures. Equally as important is working with a knowledgeable mortgage broker or lender. They help to navigate the various complexities of mortgage rates while also identifying loan options that best match financial goals and circumstances, as those will vary for everyone. As we work to compare rates from multiple lenders and understand the terms and conditions of the different loan products, we help borrowers make informed decisions and secure the home financing that is most favorable for them.

Thanks to Maggie Levin at Greenfront Mortgage for this article. You can contact her for more information on mortgage rates, construction loans or to speak with a lender at 775.260.1909, 985.517.1691 or maggie@greenfrontmortgage.com.

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