If you've been considering buying or selling you've probably been carefully following the news about interest rates and hoping they'll come down soon. Right now, they're currently sitting around 7.4%. The recent rate hike has led to a lot of questions from my clients so let's set the record straight!
The myth: The Federal Reserve sets mortgage rates.
The reality: The Fed influences mortgage rates, but it doesn’t set them directly.
So, what does determine mortgage rates? There are several factors that play a role:
- Inflation
- The job market
- Investors’ expectations for the economy
Mortgage rates often move in the same direction as the 10-year Treasury yield, which reflects economic expectations. And right now, expectations are uncertain due to the war in Iran.
When the Fed raises its key interest rate to help control inflation, mortgage rates may rise too, but it's not necessarily a one-to-one relationship. Rates can move up or down based on what’s happening in the economy and what investors expect next.
What does this mean if you’re thinking about moving?
You don’t have to put your plans on hold just because higher rates are making headlines. There are ways to make the numbers work, depending on your goals.
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If you’re buying: Get pre-approved, know your budget, and talk with your lender about your mortgage options and ways to make your monthly payment more manageable.
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If you’re selling: Pricing your home for today’s market is important. Depending on your situation, offering help with closing costs or a mortgage rate buydown can mean more to buyers than a straight price cut.
Nobody can predict exactly where mortgage rates will go next...or when. Rather than trying to time the market perfectly, let’s look at your goals, your budget, and what’s happening right here in our local market.
I’m happy to help you talk through your options and find a plan that makes sense for you.
P.S. I wanted to give a shout out to Keeping Current Matters for the graphics and some of the information in this email.
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