Looking back a year ago from the current time, home borrowing costs were at historic lows with the 30-year fixed rate mortgage at 2.80% while inflation was still low. Fast-forward to the current environment and we see that rates have doubled while inflation has hit a 40-year high. The labor market is still relatively strong, but we have seen some cockeyed numbers. There are nearly 11.5 million jobs available with 6 million Americans unemployed.
In June, the Federal Reserve embarked on a mission to bring inflation down by hiking interest rates by .75% – the largest monthly increase since 1994. So, the general public most likely thought that they would see even higher borrowing costs. But that didn’t happen. Why? The main reason is that Fed rate hikes are intended to cool inflation, slow economic growth, and slow down the labor market. If inflation cools, the economy slows, and the unemployment rate ticks up … long-term rates, such as the 30-year fixed rate, move lower.
In mid-June, the 30-year fixed rate mortgage hit a 14-year high of near 6% and has since declined to 5.30%. If the economy continues to slow and inflation inches lower, we could see even lower borrowing costs ahead. The opposite is true.
Bottom line: Home loan rates appeared to make their peak back in mid-June. With more housing inventory coming to market, now is a great time to jump into the pool of homeownership with prices and rates off their highest levels of late.
Source: Mortgage Market Guide
We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.
