Mortgage Rates Are Sliding. Could They Fall Below 6% Soon? | Omaha NE Homebuyer’s Guide

January 13, 2023
Michael Petrovich
Uncategorized

What does it mean to buyers?

High mortgage interest rates were like a bucket of ice water dumped on the sizzling-hot housing market last year. Buyers could no longer afford to buy. So builders stopped building, sellers stopped selling, and the housing market froze.

However, mortgage rates are now coming down. And the slowdown in inflation could enable them to fall even further—perhaps even below 6%.

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Mortgage rates averaged 6.33% for 30-year fixed loans in the week ending Jan. 12, according to Freddie Mac. Meanwhile, Mortgage News Daily, which reports average rates for the day instead of a whole week, had them at 6.07% as of Thursday afternoon. That’s quite a difference from when rates topped 7% just two months earlier.

The typical monthly mortgage payment is now below $2,000, a psychological milestone for many cash-strapped homebuyers.

“Let’s celebrate some good news. List prices are down, mortgage rates are down,” says Realtor.com® Senior Economist George Ratiu. “With inflation showing a tangible slowdown, I do expect mortgage rates to follow suit in the months ahead. The question is when.”

Mortgage rates have been rising as a result of the U.S. Federal Reserve hiking its own short-term interest rates to combat inflation. The Fed’s actions appear to be working: Inflation stood at 6.5% in December. While still high, it’s coming down from 7.1% year over year in November and well below the 9.1% peak in June. This could cause the Fed to ease up on its rate hikes, which could result in mortgage rates coming down.

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