The Federal Reserve announced plans to raise its short-term rates by 0.25% this Wednesday, as it continues its efforts to ward off inflation in the housing market and in the broader economy. But according to Realtor.com, this latest rate hike may not lead to a rise in mortgage rates.
Rates averaged 6.49% on Wednesday afternoon for 30-year, fixed-rate loans, down slightly from 6.58% the previous day, and more declines are expected in the months ahead.
“Mortgage rates are sensitive to the inflation outlook,” Holden Lewis, a home and mortgage expert at NerdWallet, said in a statement. “When investors believe inflation will drop over the next few years, mortgage rates drop, too. This Fed hike should help reduce the inflation rate and consequently mortgage rates.”
Buyers shouldn’t get their hopes up that rates will drop back down to COVID-19 pandemic levels, when they dipped below 3% for 30-year fixed-rate loans. But they could settle below 6% within the next year or so, says Robert Dietz, chief economist of the National Association of Home Builders.
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