![]() Because lower credit scores are deemed riskier, lenders charge higher interest rates to compensate. Your credit score: Lenders offer the lowest available rates to borrowers with excellent credit scores of 740 and above.While the broader economy plays a key role in mortgage rates, some key factors under your control affect your rate: Some are specific to you and your financial situation, and others are influenced by macro market conditions, such as inflation, the Fed’s monetary policy and the overall demand for loans. Multiple factors determine the rate you’re offered. Your mortgage rate is the percentage of interest a lender charges for providing the loan you need to buy a home. Fannie Mae predicts the average rate for a 30-year fixed mortgage will be around 7.3% by year’s end, but won’t return to the low-6% range until halfway through next year. If inflation continues to decline, mortgage rates may ease further as we close out the year. “I expect rates will remain elevated until at least mid-2024.” “The million dollar question is how long the Fed will keep rates elevated to ensure it wins the battle against inflation,” said Marty Green of the mortgage law firm Polunsky Beitel Green. The central bank will need to keep interest rates at higher levels for longer. Inflation is still well above the Fed’s target year-over-year rate of 2%. Regardless of whether the Fed hikes rates again, we won’t see rate cuts in the near future. Depending on how the economy is faring as we approach the holiday season, the central bank may still implement an additional rate hike before 2023 ends, but experts say this appears increasingly unlikely. 1 meeting this year, the Fed decided to hold rates steady, continuing a holding pattern since its last rate hike on July 26. ![]() ![]() What sent mortgage rates lower over the past week? It was a combination of economic factors, including a weaker jobs report, a dip in the 10-year Treasury yield and positive messaging from the Fed that the current rate-hike cycle may be nearing its end.ĭuring its Nov. When credit is more expensive, the economy slows as fewer people borrow and spend. High interest rates increase the cost of borrowing for both banks and consumers. Mortgage rates started to climb in early 2022, as inflation surged and the Federal Reserve stepped in to tame it by hiking its key short-term interest rate, the federal funds rate. Read more: Mortgage Predictions: Could November Be a Turning Point for Mortgage Rates? What to know first Mortgage rates vary widely across lenders, so it’s important to shop around for the most competitive rate and compare multiple loan offers to find one that best fits your financial needs. However, mortgage rates are still near a two-decade high, making it impossible for many prospective buyers to enter the housing market. That’s a drop of 26 basis points (or 0.26%) from the previous week and the biggest decline in two months. The average rate for a 30-year fixed mortgage was 7.69% last week, according to CNET’s sister site Bankrate.
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