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Mortgage Rates

What Is Going on with Mortgage Rates?

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You may have heard mortgage rates are going to stay a bit higher for longer than originally expected. And if you’re wondering why, the answer lies in the latest economic data. Here’s a quick overview of what’s happening with mortgage rates and what experts say is ahead.

Economic Factors That Impact Mortgage Rates

When it comes to mortgage rates, things like the job market, the pace of inflation, consumer spending, geopolitical uncertainty, and more all have an impact. Another factor at play is the Federal Reserve (the Fed) and its decisions on monetary policy. And that’s what you may be hearing a lot about right now. Here’s why.

The Fed decided to start raising the Federal Funds Rate to try to slow down the economy (and inflation) in early 2022. That rate impacts how much it costs banks to borrow money from each other. It doesn’t determine mortgage rates, but mortgage rates do respond when this happens. And that’s when mortgage rates started to really climb.

And while there’s been a ton of headway seeing inflation come down since then, it still isn’t back to where the Fed wants it to be (2%). The graph below shows inflation since the spike in early 2022, and where we are now compared to their target rate:

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As the graph shows, we’re much closer to their goal of 2% inflation than we were in 2022 – but we’re not there yet. It’s even inched up a hair over the last 3 months – and that’s having an impact on the Fed’s plans. As Sam Khater, Chief Economist at Freddie Mac, explains:

“Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates.”

Basically, long story short, inflation and its impact on the broader economy are going to be key moving forward. As Greg McBride, Chief Financial Analyst at Bankrate, says:

It’s the longer-term outlook for economic growth and inflation that have the greatest bearing on the level and direction of mortgage rates. Inflation, inflation, inflation — that’s really the hub on the wheel.”

When Will Mortgage Rates Come Down?

Based on current market data, experts think inflation will be more under control and we still may see the Fed lower the Federal Funds Rate this year. It’ll just be later than originally expected. As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), said in response to the Federal Open Market Committee (FOMC) decision yesterday:

“The FOMC did not change the federal funds target at its May meeting, as incoming data regarding the strength of the economy and stubbornly high inflation have resulted in a shift in the timing of a first rate cut. We expect mortgage rates to drop later this year, but not as far or as fast as we previously had predicted.

In the simplest sense, what this says is that mortgage rates should still come down later this year. But timing can shift as new employment and economic data come in, geopolitical uncertainty remains, and more. This is one of the reasons it’s usually not a good strategy to try to time the market. An article in Bankrate gives buyers this advice:

“ . . . trying to time the market is generally a bad idea. If buying a house is the right move for you now, don’t stress about trends or economic outlooks.”

Bottom Line

If you have questions about what’s happening in the housing market and what that means for you, connect with a trusted real estate professional.

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For Sellers

Why More Sellers Are Choosing To Move, Even with Today’s Rates

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It’s hard to let go of a 3% mortgage rate. There’s no question about it. It’s the main reason why so many homeowners have delayed their move in recent years. But here’s something to consider.

While your low rate might be ideal, it doesn’t make up being too cramped, having a staircase your knees can’t handle anymore, or being 1,000 miles from your family. And those real-life needs are pushing more sellers off the fence despite today’s rates.

Data shows the share of homeowners with a mortgage rate below 3% is dropping as more people move. And, as a result, the share of homeowners taking on a mortgage rate above 6% is rising, too (see graph below):

The Biggest Reasons People Are Moving Right Now

Why are some homeowners willing to take on a higher rate? A survey from Realtor.com helps shed light on that. It shows 79% of homeowners considering selling today are doing it out of necessity. And that same survey says most of the necessary reasons people are moving are non-financial in nature (see graph below):

a graph with blue textDo any of these reasons resonate for you, too?

  • You Need More Space: Whether it’s a new baby, children needing their own rooms, or having your parents move in so it’s easier to take care of them, outgrowing your space can happen fast.
  • You Need Less Space: The kids are out of the house now and you’re craving a life that’s a little simpler. Downsizing can be a major relief: fewer rooms to clean, less to maintain, and lower utility bills, too.
  • You Want to Be Closer to Family: Whether it’s to help with grandchildren or care for aging parents, sometimes the pull of being near loved ones outweighs the math.
  • A Relationship in Your Life Has Changed: Divorce, separation, or moving in together after a marriage or new partnership – all can create the need for a fresh start and a new place to call home.
  • Your Job Is Taking You Somewhere New: If you finally landed your dream job or your partner’s company is relocating, you may need to move too.

What About Mortgage Rates?

Yes, experts expect mortgage rates to ease, but slowly. The latest projections show only modest declines this year – not the 3% you may be hoping for (see graph below):

a graph of blue barsSo, while waiting for a big drop in rates might sound strategic, it could just mean more time feeling stuck in a space that no longer fits. And for many, that waiting game has already gone on long enough.

According to Realtor.com, nearly 2 in 3 potential sellers have been thinking about moving for over a year. If you’re one of them, maybe it’s time to ask:

How much longer are you willing to press pause on your life?

Bottom Line

Maybe your current house fit your life five years ago. But that “for now” house you bought in 2020? It just can’t deliver on what you need in 2025. And that’s not just okay, it’s normal.

Mortgage rates are part of the equation, for sure. But the bigger question is:

What kind of home do you need to support the life you’re living now?

Talk to an agent about what’s changed, and what kind of move would actually take your life forward.

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Affordability

Buying Your First Home? FHA Loans Can Help

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If you’re a first-time homebuyer, you might feel like the odds are stacked against you in today’s market. But there are resources and programs out there that can help – if you know where to look. And one thing that can make homeownership easier to achieve? An FHA home loan.

They’re designed to help you overcome some of the biggest financial hurdles in the homebuying process – and that’s why so many first-timers are using them to make their purchase.

Whether you’re dreaming of ditching rent, planting roots, or just wanting a place that’s truly yours, an FHA home loan could be the path that gets you there sooner than you think.

Buying Your First Home Probably Doesn’t Feel Easy Right Now

While the motivation to buy a home is still there for many people, affordability is a real challenge today. According to a survey from 1000WATT, potential first-time buyers say their top two concerns are saving enough for their down payment and making the monthly mortgage payments work at today’s home prices and mortgage rates (see graph below):

That’s Where FHA Loans Come In

FHA loans help many first-time buyers overcome these challenges.

In fact, according to Intercontinental Exchange (ICE), the average first-time buyer using an FHA loan puts down just $16,000. That’s a big difference from the $77,000 they’re putting down with the typical conventional mortgage (see graph below):

Essentially, buyers who use an FHA loan may not have to come up with as much cash up front. But the perks don’t stop there. You may also be able to pay less monthly, too.

That’s because, a lot of the time, the mortgage rate on FHA loans can be lower. Bankrate says:

“FHA loan rates are competitive with, and often slightly lower than, rates for conventional loans.”

So, if you’re thinking about buying your first place, an FHA loan may be worth exploring.

Because of the potential for lower down payment requirements and maybe even a lower mortgage rate, it could help with the two most common hurdles first-time buyers face today – saving enough money upfront and affording the monthly payment.

A trusted lender can walk you through the details, compare your options, and help you figure out what loan type makes the most sense for your situation.

Bottom Line

With the right loan and the right guidance, homeownership may be more achievable than you think.

Do you want to talk more about your options? A trusted lender is there to help.

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Buying Tips

Understanding Today’s Mortgage Rates: Is 3% Coming Back?

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A lot of buyers are pressing pause on their plans these days, holding out hope that mortgage rates will come down – maybe even back to the historic-low 3% from a few years ago. But here’s the thing: those rates were never meant to last. They were a short-term response to a very specific moment in time. And as the market finds its footing again, it’s time to reset expectations.

Back in 2020 and 2021, 3% mortgage rates gave buyers a serious boost: more affordability, more buying power, and more opportunity. But those rates were a result of emergency economic policies during the height of a global pandemic. Now that the economy is in a different place, we’re seeing mortgage rates in the high 6% to low 7% range.

And while experts currently project a slight easing in the months ahead, most industry leaders agree: rates are not going back to 3%.

Instead, many forecasts suggest mortgage rates will settle in the mid-6% range by the end of the year, pending any major economic shifts. As Kara Ng, Senior Economist at Zillow, says:

“While Zillow expects mortgage rates to end the year near mid-6%, barring any unforeseen shocks, that path might be bumpy.”

What Buyers Should Know

Basically, waiting for 3% rates might mean waiting longer than you’d expect – and missing out along the way. Instead of putting off homebuying indefinitely, make a plan to get there and focus on what you can control: your budget, your credit, and working with a trusted professional who can explain exactly what’s happening in the current market – and how to navigate it.

Your local real estate agent and a trusted lender make all the difference in this process. The experts have insights into down payment assistance programs, alternative financing options, negotiation strategies, and overall – the experience you need on your side to understand creative ways that will make your plans work.

And here’s the biggest thing to keep in mind. Since rates are projected to ease slightly later this year, if that happens, it could bring some more buyers back into the market. Acting now gives you a head start, especially with more homes on the market than we’ve seen in years.

Think about it: if mortgage rates do come down, what do you think everyone else is going to do? That’s right – they’ll jump back in too.

Getting ahead of that rush could put you in a stronger position to find the right home with less competition. Realtor.com sums it up well:

“Staying out of the market in hopes of a rate drop that never comes can lead to missed opportunities . . . Rising home prices, rent increases, and inflation might outpace any future savings on interest. And if rates do fall sharply again, buyers could face an entirely different challenge: surging competition.”

Bottom Line

Those 3% rates everyone remembers from a few years ago were the exception, not the rule.

Now that they’re settling into new territory, it’s a good time to adjust your expectations and learn more about where things are heading as this market shifts.

A local real estate agent and a trusted lender will be your best resources, always keeping you up-to-date and informed, so you can make sense of your options and build a game plan that works for you.

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Copyright © 2020-2025 Landshark Mark, LLC. All rights reserved.  
The information contained, and the opinions expressed, in these article are not intended to be construed as investment advice. Let's Talk Real Estate, Mark Sincavage, Landshark Mark, LLC and Keeping Current Matters, Inc. do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Let's Talk Real Estate, Mark Sincavage and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.