Over the past few years, RealtySouth has seen a massive increase in mortgage rates. The most notable contributor to this is the bond market. Because of that, the demand for homes has gone down considerably. Thankfully, it seems like all of that is about to change. The latest economic data shows that inflation is slowing down, and the economy is cooling. This, in turn, led to mortgage rates dropping.
What Are Current Mortgage Rates?
So, if you’re wondering about the current mortgage rates, you’ve come to the right place. In this article, we’ll walk you through everything you need to know about the homeowner’s loan. We’ll cover the different types of mortgages, 2024 predictions, and why the rates change so quickly.
Mortgage Rates 2024 Predictions
Mortgage rates are constantly fluctuating, and in the past few years, the figures seemed to be on an upward spiral. However, this trend may change in 2024. According to the Mortgage Bankers Association (MBA), the 30-year mortgage rates will drop to around 6.1% by the end of 2024. On top of that, the National Association of Realtors predicts that the rates will go as far down as 6%. While the rates may never be as low as they once were, most economists agree that it should drop below 7% by the end of the year.
How/Why Do Mortgage Rates Change So Quickly?
The main deciding factor behind mortgage rates is the bond market. Like many other long-term loans, mortgages tend to track the yield of the 10-year Treasury bond. That’s because this provides the least risk to lenders as it’s backed by the US government. So, most loans will start with this rate, then increase to account for the risk of borrowers not repaying the amount.
Recently, the note on the 10-year yield has reached its highest point since 2007. The rates skyrocketed to about 4.3% to reflect the Federal Reserve’s efforts to tame inflation. This may sound like a lot of technical jargon, so here’s a quick look at an example to make matters a little clearer. When inflation rises, the Feds will increase short-term rates to slow the economy. Plus, this will take some of the pressure off prices. Yet, when that happens, it’ll be more expensive for banks to borrow money. So, they’ll raise the rates on consumer loans, including mortgages, to make up the difference.
What Is Considered a Good Mortgage Rate?
A good mortgage rate will be slightly different for each homeowner. It’ll depend on their credit score, mortgage type, and current economic climate. However, in today’s market, most people consider a rate between 6% and 7% to be the best they can find.
What Are the Different Types of Mortgages and How Do the Rates Differ?
Prosperity Mortgage offers a few types of mortgages to prospective homeowners. In this section, we’ll cover some of the most notable varieties.
- Conventional Loans: You can choose between adjustable and fixed-rate mortgages.
- FHA Loans: This program is designed to make housing more affordable for new homeowners.
- USDA Loans: This is a government program that’s ideal for low-income rural homebuyers.
- VA Loans: This loan only applies to veterans and doesn’t require a down payment.
If you’d like to learn more about each mortgage type, don’t forget to contact the Prosperity Mortgage team.
Does the Real Estate Market Seem to Be Slowing?
Even though the mortgages are predicted to drop, we haven’t seen any significant changes in the real estate market. While property prices are decreasing in some areas, they’re also increasing in a few locations. So, it’s tough to gauge the status of the market. On top of that, the inventory of existing homes for sale hasn’t changed much. There’s a slight increase, with the inventory being highest during spring. Even though the interest rates are shifting, we’ve yet to see this reflected in the real estate market.
What Can Buyers Do to Ensure They Get a Good Mortgage Rate?
While most of the factors that affect mortgage rates are out of our control, there are a few tips you can rely on to ensure you get the lowest rate possible. Right off the bat, your credit score is crucial. The higher this figure, the lower your interest rates. Besides that, your down payment will play a major role. Typically, you have to pay about 20% of the purchase price upfront. If you can manage that, you may find yourself in a less competitive market, which means it’ll be easier to close a deal. Finally, it’s always a good idea to shop around. Ask a few different lenders for a loan and compare their interest rates to get the best deal.
Wrapping Up
If you’re curious about current mortgage rates, it’s important to stay informed. According to the MBA, 30-year mortgage rates are expected to drop to around 6.1% by the end of 2024. However, these rates can change due to various factors, including the 10-year Treasury bond. RealtySouth recommends keeping a close watch on these trends and consulting with experts like us for personalized advice to make the most of your home buying or refinancing decisions. Stay updated to secure the best mortgage terms and achieve your homeownership goals with confidence.