Even economists stumble when it comes to mortgage-rate predictions, but little should change. Lenders expected Wed.’s increase and already baked it into current rates.
NEW YORK – Wednesday’s interest-rate increase by the Federal Reserve has likely already been priced into current mortgage rates, suggesting little will change based, at least, on Fed decisions.
Economists say the mortgage market expected Wednesday’s quarter-point rate increase and largely absorbed it and already expected a pause in Fed rate increases over the coming months.
Mortgage rates probably topped out slightly higher than 7% last fall, and since they’ve been averaging in the mid-6% rage during the past months, that could be the new normal for now, says Lawrence Yun, chief economist at National Association of Realtors®. But he predicts they’ll probably head toward 6% or lower by the end of the year.
Even if rates are no longer increasing, however, homebuyers still face a major hurdle right now – a lack of properties on the market, says Daryl Fairweather, chief economist at Redfin.
Given that, homebuyers may want to consider an adjustable-rate mortgage, adds Courtney Alev, consumer financial advocate at Credit Karma. It can be a more cost-effective way to enter the market, particularly if someone does not plan to stay in the home long-term, she says.
Source: Wall Street Journal (05/03/23) Dagher, Veronica
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