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Even before the onset of the pandemic housing boom, homebuilders were constructing more single-family and townhome rental communities. Ultralow mortgage rates and soaring rents during the pandemic, coupled with cash-flush Wall Street firms seeking assets to buy only added fuel to the fire.
Many of those projects are still working their way through the pipeline. Indeed, in 2023 there were a record-breaking 27,495 build-to-rent homes completed….Story continues…
Source: Fast Company
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A mortgage rate is the interest rate charged for a home loan. Mortgage rates can either be fixed at a specific interest rate, or variable, fluctuating with a benchmark interest rate. Potential homebuyers can keep an eye on trends in mortgage rates by watching the prime rate and the 10-year Treasury bond yield.When inflation is running high, the Fed raises those short-term rates to slow the economy and reduce pressure on prices.
But higher interest rates make it more expensive for banks to borrow, so they raise their rates on consumer loans, including mortgages, to compensate. Mortgage rates have already fallen in 2024, due in large part to market volatility. With markets now stabilizing, we may see interest rates on home loans increase a bit. Over the long term, however, experts predict a gradual decline in mortgage rates.
Fannie Mae’s August 2024 forecast (its latest at the time of writing) predicts that 2025 rates will start at 6.2% and trickle downwards by 0.1% each quarter, landing somewhere near 5.9%. Mortgage rates could fall in 2024, but that’s not a given. The Mortgage Bankers Association projects a 6.5% rate by the end of the year, while Fannie Mae predicts 2024 will end with rates at 6.4%.
But there is a tipping point, recent reports found: Homeowners are nearly twice as willing to sell their home if their mortgage rate is 5% or higher, according to Zillow, and 71% of prospective homebuyers who plan to purchase their next home with a mortgage said they would not accept a rate above 5.5%.In today’s market, a good mortgage interest rate can fall in the low-6% range, depending on several factors, such as the type of mortgage, loan term, and individual financial circumstances.
To understand what’s a good mortgage rate for you, get quotes from a few different lenders and compare them. It depends on your personal situation. If you’re comfortable with the amount of money you’ll pay on a mortgage with a higher interest rate, buying may be a good choice. Consider your finances before making a decision and only buy a home if you’re sure you can afford it.
Mortgage rates are influenced by many elements, including the inflation rate, the pace of job creation, and whether the economy is growing or shrinking. The Federal Reserve’s monetary policy is a factor, too, and is set by the Federal Open Market Committee. Fed watchers now see at least two rate cuts before the end of the year, but some are betting on three, with more to come in the spring.
Some economists say the benchmark rate could be as low as 3 to 3.5 percent by the second half of 2025. Lower inflation is cutting borrowing costs across the board. For the end of 2026, the median dot now shows a target range of 3% to 3.25%, versus 2.75% to 3% three months ago. And officials’ median longer-run estimate was for a target range of 2.5% to 2.75%, also a quarter of a percentage point higher than in December.
The 30-year fixed mortgage rate is expected to fall to the low-6% range through the end of 2024, potentially dipping into high-5% territory in 2025. Here’s where mortgage interest rates are headed for the next 18 months and how that will impact the housing market as a whole. “Mortgage rates are likely to continue easing over the next few months, and likely end the year around 6.5% and be in thWe began raising interest rates at the end of 2021 to help slow inflation – the rate at which prices are rising.
It is working. Inflation has fallen a lot, and is now at our 2% target. Inflationary pressures have eased enough that we’ve been able to cut interest rates from 5.25% to 5%. We began raising interest rates at the end of 2021 to help slow inflation – the rate at which prices are rising. It is working. Inflation has fallen a lot, and is now at our 2% target. Inflationary pressures have eased enough that we’ve been able to cut interest rates from 5.25% to 5%.
A 30-year, $150,000 mortgage at a 7% fixed interest rate will be about $998 per month (not including property taxes or mortgage interest), while a 15-year mortgage at the same rate would cost about $1,348 monthly. 30-year rates have marched from 16.63% in 1981, to just 3.13% in June 2020. Many wouldn’t have thought it possible 20 years ago — or even one year ago — but rates in the low-3% range are now being widely quoted. And rates in the 2s are a reality for some.
Regardless of the loan you choose, you’re likely to get a better mortgage rate if you have a higher credit score. Similar to making a bigger down payment on your mortgage, a high credit score can help you qualify for better rates and lower monthly payments. Smart Mortgage links customer’s savings accounts with mortgage accounts. The more you save in the designated savings account, the more interest you can earn on your deposits, helping you to offset the interest payments on your mortgage.
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