After the roller coaster of mortgage rates over the last few years, they have finally begun to settle down somewhat. With rates settling in at 6.18% for the last week of January, the time is right for many Americans who bought in while rates were even higher. While we aren’t likely to see Trump-era rates anytime soon, many experts don’t expect them to go much lower.
With rates now at their lowest since September, many have taken the opportunity to refinance their overinflated mortgages. With an 18% surge week-over-week when compared to the end of January, refinancing is still down 75% since last year. This also means refinancing makes up 33.9% of the applications, and 31.2% to end January.
Joel Kan, an MBA economist shed some light on the surges. “Purchase activity that was put on hold last year due to the quick run-up in rates is gradually coming back as rates ease and housing demand remains strong, driven by supportive demographics and the ongoing strength in the job market.”
Kan also explained that loan averages exploded to 428,500- bringing them back up to the highest since May 2022. “This increase is a sign that the recent upward trend in purchase activity remains skewed toward larger loan sizes and less first-time homebuyer activity, as entry-level housing remains undersupplied, and buyers struggle with affordability in many markets.”
While this news is great to the ears of many Americans, with the Federal Reserve still targeting higher interest rates it may become even harder to get a good rate. With unexpectedly strong coming on February 3rd and the commentary from Federal Reserve Chair Jerome Powell on January 31st, it may encourage more people to strike while the iron is hot.
“The reality is we’re going to react to the data. So, if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.”
While not a surprising statement, it doesn’t exactly boost the confidence of the American people about the future and about where rates are heading in the future. Given the policies of President Biden and his consistent push for leftist policies, it isn’t a tremendous surprise that interest rates are continuing to play games and be unpredictable.
As more and more Americans are facing the shift in jobs as they are being forced to transition from virtual back to in-person, many are being forced to consider relocating. A job that was remote from Boston during COVID may suddenly require an in-person presence so that house in rural Alabama just won’t cut it anymore. This means more mortgages.
Should the trend of people getting new mortgages or refinancing continue, these rates should remain stable or even go down a bit further. While there is nothing to guarantee what the rates will do in the coming months, one thing is for certain; your other costs will continue going up over 2023. That means saving anywhere you can.
Is a mortgage refinance for you? https://youtu.be/E2nn4p-K6A8