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The Wait is Over: Mortgage Rates Predicted to Drop for Homebuyers

Homebuyers may finally catch a break this year, as signs of fading inflation could drive mortgage rates lower as soon as this month. According to Melissa Cohn, Vice President for William Raveis, a real estate brokerage firm, mortgage rates have declined by almost a full percentage point since they peaked in November, and we can expect mortgage rates to go down another quarter or even as much as half a percent over the course of the next month.

 

The average Interest rate on the 30-year fixed mortgage has fallen by three-quarters of a percentage point since mid-November, according to Freddie Mac on January 19, 2023, hitting 6.19% this week. A decrease in rates has been observed following the release of several government reports indicating a slowing of inflation in the United States. For some buyers, a mortgage rate drop means gaining purchasing power and re-entering the market.

 

Banks are going to sharpen their pencils, tighten up their margins, and do whatever they can to bring volume in the door, and lower rates will bring more real estate transactions. According to a report by Yahoo Finance on January 15, 2023, it appears unlikely that mortgage rates will revert back to the levels observed during the initial stages of the pandemic. Nevertheless, recent indications of diminishing inflation have increased the probability that the Federal Reserve will adjust its rate hikes, thereby providing some respite for mortgage rates.

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