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If you’ve been following the housing market, you’ve likely been asking the same question as many others: When will mortgage rates finally come down? After a few years of increasing rates and the fluctuations we've seen in 2024, everyone’s looking for some stability.
While it’s impossible to predict exactly where rates will land or when they'll drop, experts are offering some insights into what might happen in the near future. Here’s the latest information to help you stay informed.
Mortgage Rates Expected to Stabilize by 2025
After a period of uncertainty, many forecasts are pointing toward mortgage rates stabilizing over the next year. While we may not see a dramatic decrease, a slight easing from where rates are today is expected (check out the graph below for a visual snapshot).
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
"While mortgage rates remain elevated, they are expected to stabilize."
What Factors Will Impact Mortgage Rates?
Predicting mortgage rates is tricky because they depend on several moving parts. Even though rates are expected to calm down a bit, fluctuations could still occur based on a few major factors:
Inflation: If inflation continues to decrease, it’s likely we’ll see rates dip slightly. But if inflation stays high, mortgage rates may remain elevated longer than expected.
Unemployment Rates: The Federal Reserve plays a crucial role in shaping economic policy, and while they don’t directly set mortgage rates, their decisions influence the broader financial landscape. A stable or low unemployment rate could help bring rates down over time.
Government Policies: With new policies and changes in fiscal strategies, the government can influence where mortgage rates go. As a new administration takes office, their approach to the economy could impact mortgage rates.
Keep in mind that these forecasts are based on the most current data. As new information emerges, experts may adjust their outlook accordingly. So while it’s great to stay informed, it’s important not to base your decisions solely on predictions.
What Should You Focus On?
Instead of trying to time the market, focus on the things you can control. Here are a few ways to prepare yourself for homeownership:
Improve Your Credit: A better credit score could lead to more favorable loan options when the time is right.
Build Your Down Payment: Start setting aside extra funds for your down payment, which will give you more flexibility when securing a mortgage.
Automate Your Savings: Automating your savings can help you reach your financial goals more efficiently without the temptation to spend.
Partnering with a trusted real estate agent and lender is also key to staying updated on changes in the market and knowing how to make the best move when the time is right.
Bottom Line
Mortgage rates may fluctuate in the short term, but long-term trends suggest some relief is on the horizon. If you’re thinking about buying or selling, let’s connect to stay on top of market trends and discuss what that means for your real estate goals.
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