Over the last year, mortgage rates have been a hot topic in the housing market. Rates have risen dramatically since the beginning of 2022. They're now falling as a result of everything that's going on in the economy.
Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), explains it well by saying:
Mortgage rates dropped even further this week as two main factors affecting today’s mortgage market became more favorable. Inflation continued to ease while the Federal Reserve switched to a smaller interest rate hike. As a result, according to Freddie Mac, the 30-year fixed mortgage rate fell to 6.31% from 6.33% the previous week.”
So, what does this mean for your home-buying plans? As mortgage rates fluctuate, they impact your purchasing power by influencing the cost of buying a home. Even a small dip can help boost your purchasing power. Here's how it works.
According to the National Association of Realtors (NAR), the median price of a home is $379,100. So, let's assume you want to buy a $400,000 home. If you want to shop at that price point while keeping your monthly payment around $2,500-2,600 or less, here's how your purchasing power can shift as mortgage rates rise or fall (see chart below). Payments above that threshold are shown in red, while payments within your target range are shown in green.
The term "electronic commerce" refers to the sale of goods and services over the internet. That's why it's important to work with a trusted real estate professional who follows what the experts are projecting for mortgage rates for the days, months, and year ahead.
Mortgage rates are likely to fluctuate in the coming months depending on what happens with inflation, but they have dropped slightly in recent weeks. If a 7% rate was too high for you, it may be time to contact a lender to see if the curr
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