Mortgage Rates Decline in Early 2023
A January 26, 2023 Yahoo Finance article notes, “With rates down more than three-quarters of a point since the end of October and seller concessions becoming more common, some homebuyers have ventured back into the market,” and there are also signs that many are willing to consider refinance loans, too.
Marketwatch.com also takes note of the improvement trend; in a late-January 2023 article, we learn, “The average rate on the 15-year mortgage fell to 5.17%” which is likely to encourage some who might not otherwise have thought of a shorter mortgage term to do so now.
Things to Know About the Improving Housing Market
The news about interest rates is very encouraging for borrowers and lenders alike.
But remember that mortgage rates can be influenced by external forces including investor reaction to bad economic news, federal policy changes, rate hikes by the Fed, and other factors. How long will the downward trend go?
It is far too early in the first quarter of 2023 to predict whether the lower rates are to be a persistent trend or if the current lower rates will be undone by future developments.
In other words, if you have the ability to apply for a mortgage now, it may be smart to take advantage of the current lower rates.
But if you cannot apply just now, it’s best not to fret over the current state of mortgage interest rates and simply continue to work on your credit, save your down payment, and research a variety of lenders.
It’s entirely possible that the housing market will see a few rate spikes over the course of 2023. The key to weathering those is to remember that housing market conditions are typically a cycle--there are up times and down times which may vary due to conditions like the Fed aggressively tackling inflation with higher interest rates.
Interest Rate Factors: Your Credit
One variable that affects the mortgage loan rate you are offered by a lender? Your FICO scores and debt repayment habits. FHA home loan or FHA Rehab loan applicants may be offered more competitive interest rates when they have strong credit. Higher interest rates are offered to those deemed a higher risk for the loan.
That is an important factor to consider when applying in an era with higher rates than we saw in the last decade.
Shop Around for a Rate
Not all lenders offer the same interest rates. You may find a lender willing to offer you a more competitive rate than a similar company it’s in competition with. Shopping for a good interest rate may seem like a chore to some borrowers, but if you are after the lowest rate possible you’ll want to combine the work you do on your credit and a lender who can offer you the best rate you can get with your FICO scores.
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