Since the spring we have seen the real estate market make a correction with the number of homes sold starting to cool. For a long time, the market was out of balance with consistent and steep home price increases and record-low rates, but now that has changed. This is all due to the fact that the average 30-year fixed mortgage rate has quickly doubled this year rising to over 7% and then landing recently in the 6% range. We are starting to see now what next year may bring in terms of rate trends.

 

 

So long as inflation is high then we will see higher mortgage rates. We have recently seen some signs that inflation may be cooling which gives us some insight into the future. Many, including the mortgage industry, are hoping for positive news. Ali Wolf, Chief Economist at Zonda, says:

 

 

 

As we continue to fight through the inflation war and see it starting to come down, we can expect that mortgage rates will follow. We have seen some indication of this over the past few weeks. As the Federal Reserve works to bring inflation down, mortgage rates will come down as well. Bill McBride from Calculated Risk says: “My current view is inflation will ease quicker than the Fed currently expects.” As we look toward the new year, we certainly hope he’s right on this. This will help inject the market with some more buying power as we strive towards a balanced market between buyers and sellers.