Our team has been staying read up on the latest mortgage rate activity and think it may be important to point a couple things out.
There's a common misconception that mortgage rates should go down when the Fed cuts rates, but that isn't always the case. Overall economic health such as job growth and increased retail spending are key factors to consider and when the outlook is good, the bond yield rises. Since mortgage rates typically track with the 10-Year Treasury yield, which is going up, mortgage rates tend to increase accordingly.
The problem we face today is that false narratives surrounding the perception of the economy and the reality of the economy, mainly perpetuated by the tumultuous political environment, create a disconnect with consumers. The low rates we have experienced in recent history were low only because the economy as a whole was not healthy. Rates were being cut in an effort to stimulate the economy, stimulate growth, and increase spending. The bottom line is that if we see rates come down more, it could actually be a sign that other aspects of our financial lives are likely not doing well.
To put things in perspective, the mortgage rates our parents and grandparents were accustomed to in the 1980s reached heights of nearly 19% until the end of the decade when they finally came down to a more favorable 9.4%! They would have been thrilled with our current 6.3% - 6.9% and I think we need to get used to the idea that this is where rates are probably going to stay for a while.
While interest rate is a key consideration, it's only one of the many factors to think about when buying or selling your home. We would love to meet with you to talk about what your big picture is and how we may be able to serve you in the process.
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