If you’re waiting for mortgage rates to drop, you could be in for a longer wait than anticipated. Here’s why.
There’s no question that the has shifted dramatically over the last couple of years amid issues with stubbornly high inflation. While mortgage rates were hovering under 3% in early 2021, the resulting uptick in inflation sent the Federal Reserve on an aggressive rate hike campaign that caused mortgage rates to soar to over 8% by late 2023.
And, while the Fed’s moves have helped to temper inflation somewhat, we aren’t out of the woods just yet. The last couple of reports showed that inflation has been , and the Fed rate is now paused at . In turn, borrowing rates remain elevated, and the average rate on a 30-year fixed mortgage is now 7.36% (as of May 1, 2024), over twice what it was during the height of the pandemic.
These sharply higher borrowing costs, coupled with today’s , have made purchasing a home much more expensive for buyers, as higher rates mean paying a lot more in interest on the money you borrow. Many would-be homeowners have, in turn, opted to put their plans on pause, hoping that and make homeownership more affordable. But will mortgage interest rates fall in May? Below, we’ll break down what you should know.
Get started on your homebuying journey and compare the top mortgage rates today.Will mortgage interest rates fall in May?
Earlier this year, many experts forecasted that the Fed would by mid-2024 as inflation cooled and the economy slowed. This fueled expectations that mortgage rates in the coming months.
However, that mortgage rates will drop in May. At its May 1st meeting, the Federal Reserve and leave the federal funds rate at 5.25% to 5.50%, its highest level since 2001.
