Over the course of October, you probably noticed that mortgage rates have once again been rising. While there was a bit of a reprieve for a few months with a much-welcomed drop in rates, rates have climbed for four weeks in a row now.
On Thursday, October 24th, Freddie Mac released a survey of lenders. It showed that the average rate for a standard, 30-year fixed mortgage had climbed to 6.54%. Thankfully, this is not the 7.22% we saw in May, but it is the highest that rates have climbed since the start of August. This has left a lot of prospective homebuyers feeling confused and uncertain how or when to proceed with their home purchase plans.
Why Is This Happening?
Some borrowers may find the rise in mortgage rates counterintuitive. After all, the Federal Reserve recently reduced the benchmark interest rate. Many experts anticipate that they may do so again within the next few months. So, you might think that we would see this reflected in lower mortgage rates.
But it is not that simple. We need to account for market sentiment regarding future events. It comes down to the Fed’s upcoming meeting in early November. During that meeting, the Fed will decide whether or not to make another cut to the benchmark interest rate. As it is increasingly believed that they will not do that, we are seeing that pessimism reflecting in the markets, and in turn, in mortgage rates.
In addition, the non-farm payroll report will be coming out on November 1st, and we have the US Presidential Election on November 5th. Both of these factors are introducing more uncertainty and anticipation into the markets. Ironically, expectations are that the economy may perform well. If it does, the Fed will not be motivated to slash rates.
For those reasons, mortgage rates may keep rising over the coming days. As frustrating as the situation is, you can console yourself that one of the reasons the Fed doesn’t want to cut the benchmark interest rate rapidly is because doing so may spur inflation—and that is something a lot of Americans are struggling with.
Buy a Home in Florida with a Competitive Mortgage
Given the rise in rates, you may wonder if you should put off buying a home. While there are arguments to be made for and against that, many homebuyers will be well-served to move forward with their plans rather than trying to time their purchase perfectly.
The sooner you buy a home, the sooner you can begin building equity. The longer you have the home, the more time it also has to increase in value. For many homeowners, those benefits will outpace the cost of a higher mortgage rate. Plus, the option to refinance once rates drop again always exists.
To get started with the process, please give us a call today at 954-840-8811. We are based in Cooper City, and can help you buy a home anywhere in Florida.
