The New Normal for Mortgage Rates: What to Expect as Rates Rise
Are you a baby boomer who remembers the sky-high mortgage rates of the 1980s and ’90s? Or are you a younger individual who has only experienced historically low rates in recent years? No matter your age, the current state of mortgage rates is likely a topic of interest.
In a recent interview with CNBC, Lawrence Yun, the chief economist of the National Association of Realtors, predicted that a new normal for mortgage rates could be around 6%. This may come as a shock to those who have become accustomed to rates in the 2% range, as seen in late 2020. With rates now hovering around 6.99%, the idea of a 6% rate doesn’t seem too far-fetched.
But what does this mean for potential homebuyers and sellers? According to Robert Reffkin, the CEO of Compass, a mortgage rate below 6% could be the magic number to stimulate activity in the housing market. However, rising home prices, which have increased by more than 40% since the pandemic, pose a challenge to affordability.
Yun emphasizes the need for the Federal Reserve to cut interest rates to support supply in the housing market. With a shortage of millions of homes already in existence, a lack of new construction due to high financing costs could exacerbate the problem.
Despite these challenges, there is some good news on the horizon. Inventory has improved this year, with close to 37% more homes actively for sale in June compared to the previous year. This increase in supply could help stabilize home prices and prevent further acceleration.
Overall, the housing market is facing a period of transition as mortgage rates adjust to a new normal. Whether you’re a seasoned homeowner or a first-time buyer, staying informed about these changes can help you make the best decisions for your future. Subscribe to the CEO Daily newsletter for more insights on the latest business news and trends.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. The content is based on general research and may not be accurate, reliable, or up-to-date. Before making any financial decisions, it is recommended to consult with a professional financial advisor or conduct thorough research to verify the accuracy of the information presented. The author and publisher disclaim any liability for any financial losses or damages incurred as a result of relying on the information provided in this article. Readers are encouraged to independently verify the facts and information before making any financial decisions.