At GlobeLiveMedia we explain why mortgage interest rates could drop below 6% soon, according to Realtor. This would allow thousands of people in the US to buy a house.
Times have not been easy for consumers in the US housing market. The progressive increase in mortgage interest rates meant that thousands of people simply could not afford to buy a house. But now, mortgage interest rates are starting to creep down, and could even drop below 6%, according to Realtor.
George Ratiu, senior economist at Realtor, said he expects mortgage interest rates to decline in the coming months after seeing a tangible slowdown in inflation.
Just two months ago, mortgage interest rates had reached 7%. Now, they are, on average, at 6.33% for 30-year fixed mortgages, according to information from Freddie Mac.
This means, to put it in simple words and figures, that monthly mortgage payments are now under $2,000, which has brought relief to thousands of homeowners and buyers.
What is the reason why you can expect a drop in mortgage interest? The answer: the US Federal Reserve’s monetary policy appears to be paying off, as inflation eased again during December 2022.
According to the Bureau of Labor Statistics (BLS), inflation during the month of December was 6.5%, a percentage that is still high, but, undoubtedly, significantly less than the peak registered in the middle of from 2022, when it exceeded 9.1%, one of the highest inflation figures in the last 40 years.
Now that inflation seems to be subsiding (slowly but steadily), the Federal Reserve could ease interest rate increases, a monetary policy designed to curb inflation but which, collaterally, caused mortgage interest rates to rise.
When could US mortgage rates drop, according to Realtor?
“If inflation continues to fall at this rate, we could see mortgage interest rates below 6% by the end of February,” says Ratiu.
Again, everything depends on the behavior of inflation in the coming weeks.