Mortgage Rates
Mortgage rates are still a hot topic – and for good reason. After the most recent jobs report came out weaker than expected, the bond market reacted almost instantly. And, as a result, in early August mortgage rates dropped to their lowest point so far this year (6.55%).
While that may not sound like a big deal, pretty much every buyer has been waiting for rates to fall. And even a seemingly small drop like this reignites the hope we’re finally going to see rates trending down. But what’s realistic to expect?
According to the latest forecasts, rates aren’t expected to fall dramatically anytime soon. Most experts project they will stay somewhere in the mid-to-low 6% range through 2026.
In other words, no big changes are expected. But small shifts, like the one we just saw, are still likely.
Each time there’s changing economic news, there’s a chance mortgage rates will react. And with so many reports coming out this week, we’ll get a better feeling of where the economy and inflation are headed – and how rates will respond.
What Rate Would Get Buyers Moving Again?
The magic number most buyers seem to be watching for is 6%. And it’s not just a psychological benchmark, it has real impact. A recent report from the National Association of Realtors says if rates reach 6%:
- 5.5 million more households could afford the median-priced home
- And roughly 550,000 people would buy a home within 12 to 18 months
That’s a lot of pent-up demand just waiting for the green light. And if you look back at the graph above, you will see Fannie Mae thinks we will hit that threshold next year. That raises an important question: Does it really make sense to wait for lower rates?
Tradeoff
Here’s the tradeoff. If you are waiting for 6%, you need to realize a lot of other people are too. And when rates do continue to inch down and more buyers jump into the market all at once, you could face more competition, fewer choices, and higher home prices.
Consider the unique window that exists right now:
- Inventory is up = more choices
- Price growth has slowed down = more realistic pricing
- You may have more room to negotiate = you could get a better deal
These are all opportunities that will go away if rates fall and demand surges. That’s why NAR says:
“Buyers who are holding out for lower mortgage rates may be missing a key opening in the market.”
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