Mortgage predictions: The return of inflation is not good for home buyers

The mortgage market has been quieter than usual in recent weeks, as prices were detained Fit is just less than 7 % Since late January. But potential home buyers must prepare for some disturbances.

The Wednesday edition of the consumer price index for January showed 3 % high inflation During the past 12 months, above market expectations. Strong economic data tends to increase bond returns, which translate into High mortgage rates.

Everyone is watching how you will do this new data Impact on federal reserves The interest rate decisions in the coming months. After making three interest rates last year, the central bank indicated that it does not push to continue to reduce rates.

the Unknown effects From the Trump administration Heavy definitions And other policies – which are likely to be inflated – are more expectations. The high inflation that moves away from the annual goal of the Federal Reserve represented by 2 % will keep borrowing rates for a longer period.

According to CME Fedwatch toolWhich tracks market expectations for interest rate modifications, transforms the possibility of reducing the next price from May to July or even later. Some experts say that the high prices are greater than expected, and the Federal Reserve Bank can keep his hands until the end of 2025 or early next year.

Although monetary policy decisions in the federal reserve only Indirectly affects the mortgage marketTop inflation usually translates and increased interest rates to the most expensive mortgages for long -term borrowers.

Definitions, Federal Reserve and interest rates

Most economic expectations call for a gradual decrease in mortgage rates over the past 2025, but not much. Vi Mai The average fixed mortgage rates are expected for 30 years to Hold higher than 6.5 % For most year.

This expectation is linked Cold inflation expectationsThe weakest labor market and low prices or at least by the central bank, none of them seem imminent. There is also the threat of definitions, which can affect negatively The ability to bear costsAnd upward pressure on borrowing rates and the cost of building materials, such as wood, Used to build new homes.

Economists have different opinions about the definitions and their impact, as many have indicated that it is too early to predict how the economy is removed. Some say that any possibility of the presence of hot commercial wars will be guaranteed in the long run as companies are going to raise prices for consumers, which reduces the ability to reduce the FBI. Others see the definitions as a temporary jump in prices that will not affect the route of cutting the federal reserve rate.

Along with inflation, the Federal Reserve also weighs employment data. if The labor market is still strong According to official standards, borrowing rates will definitely remain high. High interest rates are used in general to slow the economy, while interest rate discounts are usually used to motivate it.

However, if employment data is weak (there is an increase in unemployment, for example) can have a federal reserve in reducing interest rates. Logan MuttashamiHousingWire’s lead analyst, the Federal Reserve is expected to make interest rates this year, but it does not shout at significantly low mortgage rates.

“Prices will only decrease about 6 % in response to great economic anxiety or employment in 2025,” Motashmi said.

The bottom line is that it is possible that the Federal Reserve is likely to wait for inflation to be under control or reduce the labor market before making any major moves, which will continue to pressure ascending to mortgage rates.

Expert advice for home buyers

It is never good to rush to Buy a house Without knowing what you can bear, so create a clear budget to buy the house. Here are what experts recommend before buying a house:

💰 Build your credit degree. Your credit degree will help determine whether you are eligible to get a mortgage and at any interest rate. A Credit From 740 or above it will help you qualify for a lower rate.

💰 Except for a larger first batch. greater Premium It allows you to get a smaller real estate mortgage and get a lower interest rate than your lender. If you can bear it, the batch is at least 20 % will remove the private mortgage insurance.

💰 Shop the mortgage lenders. It can help compare loans from multiple mortgage lenders Negotiate a better rate. Experts recommend obtaining at least two estimates of loans from two different lenders.

💰 Consider the leasing. Choose to Renting or buying a house Not only compare the monthly rent by paying the mortgage. Provides leasing flexibility and reducing the costs provided, but purchase allows you to build wealth and further control your housing costs.

💰 Consider real estate mortgage points. You can get a lower mortgage rate through purchase Mortgage pointsWith each point costs 1 % of the total loan amount. One mortgage point is equal to a decrease of 0.25 % in the mortgage rate.

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