Federal Reserve Chair Jerome Powell believes higher interest rates are crucial for long-term economic stability, even if they make home buying more challenging in the short term. According to the National Association of REALTORS®' “2024 Member Profile,” many prospective buyers are postponing their home purchases in hopes of a return to the ultra-low mortgage rates seen during the pandemic. However, experts agree that rates below 3% are unlikely to return soon.

Currently, the 30-year fixed-rate mortgage averages around 6.89%, significantly higher than the 3% rates seen five years ago. Economists assert that maintaining higher rates is necessary to control inflation and support overall economic recovery.

For those waiting for a return to record-low rates, it’s important to understand that such conditions may not return for a long time. At the current 6.89% average, a $400,000 home with a 20% down payment would have a monthly mortgage payment of approximately $2,105, while a 10% down payment would lead to a $2,369 monthly payment.

While higher mortgage rates present short-term challenges, they are essential for long-term economic health. Buyers should consider moving forward with their home purchase plans rather than waiting for historically low rates that may not return soon.

Bottom Line

Ready to navigate today’s housing market? Contact Stuecher Manning Group for expert advice and tailored solutions to help you make informed decisions.

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Source: nar.realtor