Considering purchasing a home this year? You’re undoubtedly keeping a close eye on mortgage. It’s a good idea to look at the larger picture of where mortgage rates have been historically compared to where they are currently because mortgages have an impact on what you can afford when you take out a home loan and affordability is a concern today. In addition, it’s critical to comprehend how they relate to inflation in order to predict where rates will likely move in the near future.
Interest rates have dramatically risen since the beginning of last year. However, despite that increase, current rates are still lower than the 52-year average. Although that historical perspective provides helpful context, purchasers are accustomed to the 3% to 5% range in mortgage rates, which has been the range for the past 15 years.
This is significant because it explains why, despite rates being close to their long-term average, the recent increase in rates may have left you feeling sticker-shocked. A little bit lower interest rates would be good, even though many buyers have grown accustomed to the high rates over the last year. It’s crucial to have a look at inflation to see if that’s a likely scenario.
Bottom Line for Mortgage rates
Looking at where rates have been in the past can be useful for predicting where they might go. As long as the historical correlation between inflation and mortgage rates persists, the recent drop in inflation may be excellent news for the future of mortgage rates and your aspirations to become a homeowner. Look for a local real estate agent for more information.