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Question: “When are mortgage and interest rates going to drop?”
Expert: Mark Hamrick, Senior Economic Analyst with Bankrate
Answer:
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If you are looking to buy a house, chances are the current mortgage rates are adding to the sticker shock. Mortgage rates have steadily increased since the pandemic. Current rates for 30-year fixed mortgages are hovering close to 8% and this could increase your monthly payment by hundreds of dollars
Unfortunately, no one outside of the Federal Open Market Committee can truly predict what will happen with rates or when, but Mark Hamrick with Bankrate says there are indicators that suggest rates won’t drop anytime soon.
“Seeing rates get knocked back down at the beginning of the pandemic that was abnormal, so I think what we have been seeing of late has been more of a normalization,” Hamrick said. “Do we think mortgage rates are going to decline in the near term, or decline sharply, the answer is no. Do we think they will ease, they could absolutely.”
Hamrick says often mortgage rates are tied to the strength of the economy.
“They track the yield of the 10-year treasury bond, that in many ways gives us a number of different considerations, including the strength of the economy, they just completed third quarter and it is likely to be the strongest of the year so far, the job market remains robust and consumers are spending at a level that is surprisingly firm as well,” Hamrick said.
He says weakness in the economy such as a declining job market or lower consumer spending could indicate a potential drop in mortgage rates.
Hamrick says it's important to remember we likely won’t see low rates like the 3% mortgage rates we saw during the pandemic.
He says around 7% is really consistent for 30-year fixed-rate mortgages over the last four decades.
