Is 6% the new norm for mortgage rates?
Mortgage rates have hovered in the low 6% range since the beginning of the month with the most recent 30-year fixed coming in at 6.25%.* The bond market is reacting to the surge in energy costs in Europe contributing to inflation, which analysts are concerned will last longer than expected. European, Canadian and Australian banks are all raising interest rates between 50- and 75-basis points. Our own U.S. Federal Reserve is meeting in two weeks to discuss another increase of 75-basis points. Again, the sooner we can curb inflation the sooner world banks can start to back off interest rate hikes.
Housing prices could drop 4% next year
One well-known analyst sees rising interest rates and homebuyer inertia leading to an oversupply of homes next year causing a 4% drop in home prices. And 2024 could see another 5% decline.
If these predictions hold, and mortgage rates moderate next year, we could be looking at a shift from a seller’s market to buyer’s market. Talk to your real estate agent and lender to develop a strategy for the roller coaster market ahead. Paying attention to market analysts and relying on these professionals can help you land your dream home at an affordable price.
First-time homebuyers guide: part 12
The terms of your mortgage depend heavily on your credit score, or FICO score. Typically, the higher your FICO score the less of a risk you are and the more favorable your loan terms, meaning a lower interest rate.
FICO scores range between 300 to 850. A score from 700-739 is viewed as good credit, and should put you in a good position to get a low rate on your home loan. And if you have a low FICO score there are a number of ways to bring it up before applying for your mortgage.**
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in under 10 minutes. Grab a few important documents to get started.
- Tax Returns
- Copies of W-2s (or 1099s for independent contractors,
freelancers and the self-employed) - A payroll stub
- A bank statement
- Loan obligation info (student loans,
auto loans and credit cards)
* National average rates as of 9/6 are not advertised rates from Guaranteed Rate and are used for informational purposes only.
** Guaranteed Rate does not provide credit counseling or credit repair services.
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John Kistner is Guaranteed Rate’s Market Analyst. Market Updates are designed to provide readers with a high-level yet insightful view of how economic news, events and trends affect mortgage rates and the homebuying process.