Source: Forbes —
Key takeaways
- Average mortgage rate currently stands at 6.95% for a 30-year loan and 6.29% for a 15-year loan.
- Experts believe mortgage rates will be contained to a narrow window as we move into 2023.
- If you are considering buying a home, make certain you can afford it and plan to stay in the house so you don’t lose money.
Many people are sitting on the sidelines wondering if now is the time to buy a house. They want to know if mortgage rates will continue to climb higher. Here is where mortgage rates are today and where experts believe they will be heading in the months ahead.
Higher rates in response to high inflation
Inflation escalated in early 2022, with gasoline prices spiking, housing prices reaching unprecedented levels and a sharp increase in grocery prices. Consumers bought less and dug deeper into their pockets to pay for their daily needs.
Government spending and the Russia-Ukraine conflict also played a role. Add in the fact that China continues to lock down due to its zero-COVID policy, and inflation is here to stay. In response, the Federal Reserve started a series of interest rate hikes to combat inflation and reduce the amount of money circulating in the economy.
On the surface, raising interest rates to draw cash out of the economy seems like an odd move. It only serves to cause financial pain for consumers and businesses alike. However, inflation would have only worsened if the Federal Reserve had not started raising interest rates. It would have made it even harder for people to buy necessary and discretionary goods. Drawing money out of the economy puts pressure on manufacturers to reduce prices and restore affordability.
;
The government has borrowed an obscene amount of money in the last few years. It is not possible for Americans to work enough man-hours at current pay scales to ever pay it off. By inflating the money the government will be able to pay off the debt with worthless money and reduce the number of man-hours of work needed for the same goal. This hurts the middle class the most. Affluent people don’t care if prices go up. Lower-class persons get welfare, free lunch and scholarships and also their expectations in life are not as high. The “upwardly mobile” middle class bears the greatest burden. Inflation is coming whether we like it or not. It is inevitable. This is all caused by tax and spend policies and borrowing without limits policies.