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Understanding Mortgage Rates: Historical Data and Future Predictions for Homebuyers

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If you plan to buy a home soon, staying informed about mortgage rates is crucial. Mortgage rates directly impact affordability when taking out a home loan. Given the recent escalation of mortgage rates, it’s helpful to analyze the historical trends and mortgage interest rates to understand their relationship with inflation to make informed home buying decisions.

Understanding the Impact of Mortgage Rates

The Freddie Mac Primary Mortgage Market Survey has tracked the 30-year fixed mortgage rate since April 1971. The graph below illustrates the average mortgage application data collected from lenders nationwide:

20230906 Mortgage Rates

The graph illustrates the dramatic rise in mortgage rates since the beginning of last year. Many buyers have become accustomed to mortgage rates ranging between 3% and 5%, which we’ve experienced over the past 15 years. These low rates were implemented to offset the negative impact of the crash of 2008 and pandemic years of 2020-2022.

Exploring the Recent Increase and Buyer Reactions

Changes in mortgage rates.

The rapid surge in mortgage rates during the latter half of 2022 slowed the market. Even though many buyers have been squeezed out of the market by the higher rates, today, there are enough buyers who can manage the higher rates, and the market has remained stable.

Analyzing the Connection Between Inflation and Mortgage Rates

Historically, there has been a noticeable correlation between inflation and mortgage rates, as depicted in the graph below:

20230906 Inflation and 30 year fixed rate mortgage

The graph clearly demonstrates the strong relationship between inflation and mortgage rates. Whenever there is a significant shift in inflation (shown in blue), mortgage rates tend to follow suit shortly after (shown in green).

The circled section highlights the recent inflation spike, with mortgage rates following closely behind. As inflation has subsided somewhat this year, mortgage rates have yet to make a similar adjustment.

Predicting the Future of Mortgage Rates

Based on historical patterns, experts believe mortgage rates will eventually align with inflation. While it is impossible to predict the exact trajectory of mortgage rates accurately, if inflation continues to moderate, history suggests a decline in mortgage rates will follow.

Being aware of these factors and staying updated on mortgage rate trends will empower you to navigate the market effectively as a homebuyer.

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Bottom Line

If you’re considering buying a home in the next 12 months … now is the time to start taking action. When mortgage rates come down – and all the experts say they will – there will be a dramatic increase in buyer demand for homes. Due to a decade of anemic new home construction, the underlying reality of the market is that there are more buyers than homes available for sale. This means that when mortgage rates do come down, we’ll likely see a return to home buyer bidding wars. The solution is to set up a buyer consultation with our team to build a home-buying strategy to position you to buy the home you want when the time is right.

 

Meet the SkyBlue Team

James Bradley - Principal Broker   
Licensed in OR and WA
James Bradley - Principal Broker
Licensed in OR and WA
Rachel Bradley - Principal Broker - Licensed in OR
Rachel Bradley - Principal Broker
Licensed in OR
Susan Bradley - Marketing Director - Licensed in OR
Susan Bradley
Marketing Director

How's the Market?

After two years of double-digit appreciation the Portland real estate market has shifted. The dramatic increase in interest rates has slowed sales. The chart below provides a snapshot of the Portland market as of this week.

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You may be wondering if prices are projected to rise or fall…or how much competition you may be facing in your market. The free eGuide above will answer many of your questions and likely bring up a few things you haven’t even thought about yet.

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Uncertain about selling? Many people are hesitant to sell because they are concerned about the selling and buying timeline. They want to be sure their home sells in time to cover expenses for the new home they want to buy and at the same time they want to be sure they don’t sell before they have found their next home. This is a valid concern.

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The good news is, it is possible to sell your current home and buy your next home, even in this competitive market. Click the image above to learn more about the SkyBlue Sell-Buy Program.

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Rachel Bradley - Principal Broker - Licensed in OR

Rachel Bradley

Principal Broker

Licensed in OR

503-936-3373

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