Mortgage Interest Rates Forecast
For months now, there has been a lot of talk about "How long can mortgage rates stay so Historically low?" When one thinks about it, that is a very good question and I would love to share with you the forecast on mortgage rates.
For starters: A key point that we all need to keep-in-mind is the Covid pandemic and how it has been handled. We all know of the “shutting down of businesses and the stay-at-home mandates” did in fact put the brakes to the “wheels” of the robust economy that we were experiencing prior to the Covid shut down.... in other words, the economy was “on-a-big-time-positive-roll”.
This shutting down of a robust economy has placed the whole country in what can best be described as “challenging times” and/or some would say a recession.
As-you-know, the Real Estate industry plays a large role in regards to the economy. If you look at the economy as a pie, the sales and purchasing of homes and business buildings take up a sizable chunk of that pie during challenging times or even when times are super good. Economic wise.... the Real Estate industry simply cannot cease. The Real Estate industry may at times “limp along” but we always get through the challenging times and/or periods of recession.
So with that said, one of the main functions of the Federal Reserve System is to safeguard the economy. So for whatever a “slowdown” reason may be, if the economy slows down then the Federal Reserve will take action to reverse the negative trend by revitalizing and/or re-energizing it.
How you may ask? The Fed’s (Federal Reserve) historical pattern during "challenging times" is to keep mortgage rates low or lower them even more if necessary. As we all know the Covid pandemic shut-down threw a wrench into the economy, therefore keeping the rates down during this economic downturn is in-line with the Fed's historical pattern. It stands to reason that in order to boost and/or give the economy a lift, the mortgage rates need to stay very low for now.
The Forecast is in.... just recently the Federal Reserve officials have announced that they will leave the mortgage/interest rates low or possibly slightly lower than what we are currently experiencing... this at least going into the year 2023 and/or throughout 2023.
Keeping the mortgage rates at a historically low level through 2023 is indeed awesome news, but here in San Diego the "low rates" presumably unintended consequence is that we are experiencing an influx of buyers and not enough homes for sale (inventory). The current purchase demand being higher than the amount of homes for sale is therefore driving up the market price of homes due to buyer bidding wars.
Oscar Castillo : BROKER - REALTOR®