Mortgage rates have been on a bit of a roller coaster this year, and if you’re trying to keep track without getting lost in the jargon, you’re not alone. Let’s break it down into plain speak.
First off, mortgage rates started the year on the high side, but they’ve been taking a slow stroll downhill since then. Think of it like a balloon that’s been let go—it started up high but is now gently floating back down. By August, the average 30-year fixed mortgage rate had dipped a bit compared to the start of May.
So, what’s behind these ups and downs? A few key players are stirring the pot:
1. **Inflation**: This is like the cost of living’s speedometer. When prices of everyday stuff go up, it means inflation is revving higher. Lenders don’t want to lose out because of this, so they might hike up mortgage rates to stay ahead.
2. **Economic Growth**: When the economy is booming, people have more cash to splash, and they’re more likely to borrow money, including for buying homes. This can push mortgage rates up because lenders have only so much money to lend.
3. **The Federal Reserve**: They’re like the economy’s DJ, adjusting the volume (aka interest rates) to keep the party (the economy) from getting out of hand. They don’t set mortgage rates directly, but their moves influence the rates.
Now, about the Federal Reserve’s next move. There’s a bit of a buzz that they might cut rates in September. If they do, it could lead to mortgage rates taking a little dip too. Experts are predicting that if the Fed snips rates, mortgage rates might mirror that cut, making it a bit cheaper to borrow for a home.
But remember, predicting mortgage rates isn’t an exact science. It’s like trying to guess tomorrow’s weather—experts can give it their best shot, but Mother Nature has the final say. So, keep an eye on the news, and maybe cross your fingers for a friendly nudge downwards in those rates.
There you have it—mortgage rates in a nutshell, no economics degree required. Keep this guide handy, and you’ll be navigating those mortgage rate conversations like a pro.
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