There has been a bit of a confusion when it comes to buying a home in America right now: it appears that interest rates are cooling off, yet mortgage rates have gone up.
If you had to do a double take, you are not alone.
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NPR reported on why mortgage rates have gone up, and when they might settle, especially since the Federal Reserve cut interest rates by half a point in September.
Halfway through October this year, mortgage rates had had their largest jump since April, going above the rate and expectation of many looking to buy a home.
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According to NPR, “the latest data from Freddie Mac showed that the average 30-year mortgage rate had increased to 6.3%” during the middle of October.
The new outlet noted that’s about a quarter point higher than it was at the month. This is all due to the fact that the federal interest rate is not tied to mortgage rates, with different factors influencing if they go up or down.
Mortgage lenders are looking to make some money, as well as cover their expenses, when they loan homebuyers the money at purchase. This comes in the form of an additional percentage, on top of variables such as the type of loan, credit score and location.
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While many Americans were waiting out the inflation and price hikes of 2024 to pass by, they might have to continue to hold off on buying a home until spring of 2025.
Laurel Wamsley, a reporter for NPR, cautioned that it “could be March before we really see a rebound get going here. Fannie Mae is predicting that home sales could be 10% higher next year, coming off of the very low levels that we’ve been seeing.”
This all culminates to the fact that while the Federal Reserve can have some influence on mortgage rates, they ultimately do not set them. Come 2025, there could be new variables that impact the rates of mortgages, which could be good or not so good for the homebuying public.
“Looking at the end of this year and into 2025, I foresee mortgage rates staying in the 6% range, likely bouncing between 6% and 7%,” shared Dan Richards, president of Flyhomes Mortgage. “A December rate cut will offer some relief, and the most recent jobs report shows the economy’s growth is slowing down. If these trends hold, it’s realistic to expect rates to inch down over the next six months.
“One thing I’m confident about: Don’t hold your breath for a major drop. We’re not likely to see rates in the 5% range anytime soon.”
So if you were hoping to buy a home, you might have to wait until next year to do so, and even then, you’ll want to keep an eye on where mortgage rates stand separate from the Fed.
In the meantime, it might be a good idea to get a down payment together so you are ready to strike when the market opens up and the mortgage rates drop.
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This article originally appeared on GOBankingRates.com: If Interest Rates Are Going Down, What Will Mortgage Rates Look Like in 2025?