Mortgage Rates Are Dropping. What Does That Mean for You?

<article class="post-576570 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-576570"><span class="entry-date">December 19, 2022</span><div class="entry-header center-block text-center"><h1 class="entry-title">Mortgage Rates Are Dropping. What Does That Mean for You?</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Mortgage+Rates+Are+Dropping.+What+Does+That+Mean+for+You%3F&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fmortgage-rates-are-dropping-what-does-that-mean-for-you%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="Mortgage Rates Are Dropping. What Does That Mean for You? | Simplifying The Market" class="webfeedsFeaturedVisual wp-post-image" decoding="async" link_thumbnail="" loading="lazy" sizes="auto, (max-width: 549px) 100vw, 549px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/12/16162628/mortgage-rates-are-dropping-what-does-that-mean-for-you-KCM-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/12/16162628/mortgage-rates-are-dropping-what-does-that-mean-for-you-KCM-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/12/16162628/mortgage-rates-are-dropping-what-does-that-mean-for-you-KCM.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>Mortgage rates have been a hot topic in the housing market over the past 12 months. Compared to the beginning of 2022, rates have <a href="https://www.freddiemac.com/pmms/archive">risen dramatically</a>. Now they’re dropping, and that has to do with everything happening in the economy.</p>
<p>Nadia Evangelou, Senior Economist and Director of Forecasting at the <em>National Association of Realtors</em> (NAR), explains it well by <a href="https://twitter.com/NAR_Research/status/1603455050390577152">saying</a>:</p>
<blockquote>
<p><em>“<strong>Mortgage rates dropped even further this week as two main factors affecting today’s mortgage market became more favorable. Inflation continued to ease while the Federal Reserve switched to a smaller interest rate hike</strong>. As a result, according to Freddie Mac, the 30-year fixed mortgage rate fell to 6.31% from 6.33% the previous week.”</em></p>
</blockquote>
<p>So, what does that mean for your homeownership plans? As mortgage rates fluctuate, they impact your purchasing power by influencing the cost of buying a home. Even a small dip can help boost your purchasing power. Here’s how it works.</p>
<p>The median-priced home according to the <em>National Association of Realtors (NAR) </em>is <a href="https://www.nar.realtor/newsroom/existing-home-sales-slumped-5-9-in-october">$379,100</a>. So, let’s assume you want to buy a $400,000 home. If you’re trying to shop at that price point and keep your monthly payment about $2,500-2,600 or below, here’s how your purchasing power can change as mortgage rates move up or down (<em>see chart below</em>). The red shows payments above that threshold and the green indicates a payment within your target range.</p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2022/12/16162626/buyers-purchasing-power-MEM.png"><img alt="Mortgage Rates Are Dropping. What Does That Mean for You? | Simplifying The Market" class="aligncenter wp-image-47645" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/12/16162626/buyers-purchasing-power-MEM.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/12/16162626/buyers-purchasing-power-MEM.png 1000w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/12/16162626/buyers-purchasing-power-MEM-400×300.png 400w" width="650"/></a></p>
<p>This goes to show, even a small quarter-point change in mortgage rates can impact your monthly mortgage payment. That’s why it’s important to work with a trusted real estate professional who follows what the experts are projecting for mortgage rates for the days, months, and year ahead.</p>
<h3><strong>Bottom Line</strong></h3>
<p>Mortgage rates are likely to fluctuate depending on what happens with inflation moving forward, but they have dropped slightly in recent weeks. If a 7% rate was too high for you, it may be time to contact a lender to see if the current rate is more in line with your goal for a monthly housing expense.</p>
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