Mortgage Rates Will Come Down, It’s Just a Matter of Time

<article class="post-541535 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-541535"><span class="entry-date">November 21, 2022</span><div class="entry-header center-block text-center"><h1 class="entry-title">Mortgage Rates Will Come Down, It’s Just a Matter of Time</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+Will+Come+Down%2C+It%E2%80%99s+Just+a+Matter+of+Time&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fmortgage-rates-will-come-down-its-just-a-matter-of-time%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="Mortgage Rates Will Come Down, It’s Just a Matter of Time | 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/2022/11/18113235/mortgage-rates-will-come-down-its-just-a-matter-of-time-KCM-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/18113235/mortgage-rates-will-come-down-its-just-a-matter-of-time-KCM-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/11/18113235/mortgage-rates-will-come-down-its-just-a-matter-of-time-KCM.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>This past year, rising mortgage rates have slowed the red-hot housing market. Over the past <a href="https://www.nar.realtor/newsroom/existing-home-sales-slumped-5-9-in-october">nine months</a>, we’ve seen fewer homes sold than the previous month as home price growth has slowed. All of this is due to the fact that the average 30-year fixed mortgage rate has doubled this year, severely limiting homebuying power for consumers. And, this month, the <a href="https://www.freddiemac.com/pmms/archive">average rate</a> for financing a home briefly rose <a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-rise-above-seven-percent">over 7%</a> before coming back down into the high 6% range. But we’re starting to see a hint of what mortgage interest rates could look like next year.<span id="more-47492"></span></p>
<h4><strong>Inflation Is the Enemy of Long-Term Interest Rates</strong></h4>
<p>As long as inflation is high, we’ll see higher mortgage rates. Over the past couple of weeks, we’ve seen indications that inflation may be cooling, giving us a glimpse into what may happen in the future. The mortgage market is eagerly awaiting positive news on inflation. As Ali Wolf, Chief Economist at <em>Zonda</em>, <a href="https://www.builderonline.com/data-analysis/a-look-at-the-relationship-between-the-10-year-treasury-and-30-year-mortgage-rate_o">says</a>:</p>
<blockquote>
<p>“<strong><em>The housing market is expected to face continued uncertainty heading into 2023 as consumers, financial markets, and policymakers work through their respective challenges in today’s economy</em></strong><em>. . . . we are watching for any additional stability in the MBS market, signs of cooling inflation, and/or less aggressive Federal Reserve action to give us confidence that mortgage rates are past their peak.”</em></p>
</blockquote>
<h4><strong>What Does This Mean for the Future of Mortgage Rates?</strong></h4>
<p>As we get through the inflation battle and start to see that coming down, we should expect mortgage rates to follow. We’ve seen nods of this over the past couple of weeks. As the <em>Federal Reserve</em> works to bring inflation down, mortgage rates will come down as well. Bill McBride from <em>Calculated Risk</em> <a href="https://calculatedrisk.substack.com/p/housing-and-inflation">says</a>:</p>
<blockquote>
<p>“<em>My current view is inflation will ease quicker than the Fed currently expects.”</em></p>
</blockquote>
<p>As we look toward next year, we certainly hope he’s right.</p>
<h3><strong>Bottom Line</strong></h3>
<p>Mortgage rates will come down – it’s just a matter of time. The hope is we continue to see more positive news on inflation, and that’ll bring mortgage rates down. This will give prospective homebuyers more buying power and lead to more homeowners throughout the country.</p>
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