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Federal Reserve Mortgage Rates, What’s Next?

Financial trends have been a common discussion topic across all sectors over the past few months as consumers face high inflation rates, the government continues to raise interest rates in response to inflation, and mortgage rates rise in response to the rising fed rates. Real estate agents and their clients alike have been watching these volatile changes, wondering what will likely happen next in the coming weeks and months. 

Mortgage rates have an immediate impact on the real estate sector, as they affect buyers’ monthly payments and therefore how much home they can buy. As a real estate agent, you want to stay in tune with these changing rates so that you can counsel your clients and provide them with better service. 

We will explore what you need to know about the current mortgage interest rates. 

Mortgage Rate Hike? Two Scenarios for Real Estate  

The first question that real estate agents and clients have is whether interest rates will improve in the near future. Looking ahead, economists predict that one of the following two main scenarios will occur: 

  1. Mortgage interest rates will continue to rise and hit either 8% or higher by the end of the year. This would represent record-high interest rates; 
  1. Rates could begin to stabilize by the end of the year. 

Each of these two scenarios will impact how you engage with your clients and help them make the best real estate decisions for their specific situation. Here is what you should know about the rate trends and what you should look for moving forward. 

 Fed Mortgage Rate Trends 

Mortgage rates have reached impressively high rates in recent months. At the end of October 2022, the rate reached a 20-year high of 7.08%. As we moved into November, there was a slight dip that helped it get back below 7%, but this was likely to offer little relief to potential real estate clients. The numbers remain incredibly high compared to the interest rates that were seen just a few short years ago. 

 Mortgage Rate Increases: What to Look for Next 

As we look toward the end of the year and the direction that interest rates will likely move, it can help to know which factors you should be more mindful of as a real estate agent (especially any factors that might signal an upcoming change). In this situation, the factor to be most aware of is the overall inflation rate. The Fed continues to raise the interest rate in an attempt to counteract the high inflation rate the country is currently experiencing. If inflation stabilizes, the Fed would then likely become more conservative with the interest rate. This, in turn, would slow down or even stop the rise of mortgage interest rates. 

Looking at client behavior, real estate will likely still experience considerable volatility. Those new to buying and selling will find the rapidly changing interest rates and the instability they cause a bit off-putting, which will result in many potential clients putting off their real estate decisions until they have better clarity. Other clients will hesitate to move forward with their purchases because the high-interest rate will limit the amount of loan they can afford. This, in turn, can result in buyers being priced out of their preferred homes and deciding to wait until they can secure a lower interest rate. 

For real estate professionals struggling to keep up with these changing conditions in order to help clients navigate the ups and downs, continuing education opportunities can be very valuable. These opportunities to keep learning will improve your ability to analyze financial trends, help clients understand interest rates, and navigate the rapidly changing world of real estate. With continuing education resources, you will be able to provide your clients with better overall services. 

 Launch Your Career with Colibri Real Estate 

Ready to take your real estate career to the next level? Colibri Real Estate has helped hundreds of thousands of real estate agents and brokers throughout the country. Get started with our online real estate classes to prepare for your license exams, upgrade your license, or enhance your skill set.