Let’s talk about interest rates. We know. This very important part of a mortgage has been a major talking point for all of us in real estate. Rates shot up from historic lows just a couple of years ago, but something happened last month that was a big deal.
You likely know what we’re talking about: The Federal Reserve chose to raise its rates in June. This caused many experts in our field to speculate it could signal much calmer seas ahead over the next year or so. Just consider these words from Mike Fratantoni, chief economist at the Mortgage Bankers Association, last month.
“We expect that mortgage rates will drift down over the second half of the year as the economy slows and the Fed reacts accordingly by holding off on further rate hikes,” he said in this informative piece from Bankrate.com.
Here’s why last month’s action was good news all around the closing table, even if more hikes are possible, even this summer.
As soon as the decision was announced, experts became optimistic that mortgage rates may have generally reached their peak. Take the prediction from Realtor.com Chief Economist Danielle Hale, who said buyers may see rates in the low 6-percent range by the end of 2023. That certainly is nowhere near the levels we saw during the pandemic, but that kind of decrease could be just enough to be enticing enough for many buyers who have been waiting to jump back into the housing market.
If more willing buyers are out there, that’s automatically a good thing for sellers. We know inventory remains tight, especially here in the DMV. But if buying activity heats up, that could be enough to encourage people to list their homes and start their next chapter. Sales have fallen by almost 25 percent this year nationwide. Still, much of that is attributed to both lack of supply and interest rates, so if those two factors are at least mitigated, we should start to see more homebuying and selling soon.
For everyone else
As factors such as a strong market and a decline in inflation continue to hold true, the idea of a soft landing for the overall economy remains a real possibility. That means minimal long-term effects for a housing market that has been, should we say, challenging. We’ve heard a lot that 2020 and 2021 are years we’ll never see again in the housing industry, but a return to the solid markets in the pre-pandemic years would be welcomed, too!
No matter what ultimately happens with interest rates for the rest of this year and into 2024, the Pride Settlement team knows people will keep buying and selling homes all around our area. And no matter who you are related to the transaction, you deserve a professional title and closing expert that is proud of its work and the community it serves. Reach out to us for all your DMV transactions!