Home News When will mortgage rates go down? Brace yourself, economists warn house hunters that rates of 7% may be the ‘new normal.’

When will mortgage rates go down? Brace yourself, economists warn house hunters that rates of 7% may be the ‘new normal.’

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When will mortgage interest rates go down? And will they go down soon?

“Anyone predicting mortgage rates should be humble,” said Ari Wolff, chief economist at Zonda Research, a housing market research platform. barons live interview podcast.

“You’re basically trying to predict what will happen to the 10-year note, what will happen to the Fed, what will happen to inflation…all of this for the mortgage rate forecast to be correct. assumptions must be correct,” she added.

The rate remained at 7.14% as of Wednesday afternoon, according to Reuters. mortgage news dailyThis is the highest price in 20 years. Freddie Mac historical data FMCC.

“People adapt”

— Ali Wolf, Chief Economist, Zonda Research

Looking at where the economy is currently headed, Wolff said. In fact, Zonda expects mortgage rates to remain above 5% and could rise to 8%.

“It could be wrong,” Wolfe stressed. “In our model, we don’t often see inflation that high, quantitative tightening, and short-term interest rates changing that quickly.”

Some say it’s time to get used to the new high interest rate environment. “When I first bought my home, the mortgage rate was 7.5% for her or 8% for her,” Christine Cooper, her chief U.S. economist and managing director at CoStar Group, said in her MarketWatch interview. Told.

“It’s been a part of life. And now new homebuyers are kind of in shock,” she added. We’re just going through this transition period and people will adjust.”

Will the housing recession destabilize the economy?

Most likely not, according to one expert.

Indeed, house prices could fall as demand dwindles and people hold off on buying.

“We cannot rule out the possibility that demand and house prices will fall significantly before the market normalizes,” said Christopher Waller of the Federal Reserve Board. said at Thursday’s event.

But he added he wasn’t worried the correction would trigger a wave of defaults and destabilize the economy like the last recession did.

“Mortgage underwriting was relatively tight in the 2010s, so today’s mortgage borrowers generally have higher credit scores than they did before the last housing adjustment,” he explained.

“And our experience with the last adjustment has shown that most borrowers will default only if they experience a negative income shock in addition to being behind on their mortgages,” Waller said. added.

Thinking about the housing market? Write to MarketWatch reporter Aarthi Swaminathan ([email protected]).

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