- Today's high mortgage rates will likely cool down a bit by the spring homebuying season, a prominent economist predicted.
- By the spring, a typical 30-year mortgage rate will likely be in the 6-7% range, said Lawrence Yun, chief economist at the National Association of Realtors.
- Mortgage rates have surged since the beginning of 2022, closing in on 8% and hitting two-decade highs last month, driving monthly payments on new mortgages on typical homes into unaffordable territory for most buyers.
- Lower mortgage rates could allow some buyers who have been priced out of the market to return to house hunting.
If high mortgage rates are stopping you from house hunting—a pretty common boat to be in these days—there may be some relief on the horizon, a prominent economist predicted.
The average rate offered for a 30-year mortgage, which flirted with 8% last month according to Freddie Mac, is likely not going to get any higher, Lawrence Yun, chief economist at the National Association of Realtors, said in a speech Tuesday. Yun believes mortgage rates will fall to the 6% to 7% range by the spring.
“I believe we’ve already reached the peak in terms of interest rates,” Yun said. “The question is when are rates going to come down?”
Mortgage rates have surged since 2022 as the Federal Reserve has ratcheted up the influential fed funds rate in an effort to subdue rampant inflation. With rates near their highest since 2000, the typical mortgage payment to buy a house is hundreds of dollars more per month than it was in 2021 when the average rate hit a record low of 2.65%. Buying a house is simply not financially possible for many would-be homebuyers these days.
With rates so high, hardly anyone is taking out a mortgage. An index measuring mortgage application volume by the Mortgage Bankers Association scraped its lowest since 1995 last month and has been hovering close to that level.
But that could change soon. When mortgage rates fell slightly earlier this month, mortgage applications showed some signs of life, rising 2.5% the week ending Nov. 3, and another 2.8% the week ending Nov. 10 according to MBA data released Wednesday.
More downward pressure on mortgage rates may be coming. Mortgage rates tend to move in the same direction as yields on 10-year Treasurys, which tumbled Tuesday after a government report showed inflation on a downward trajectory.