The housing market's recovery is gradual, much like the saying "Rome wasn't built in a day." While buyers face challenges, recent trends indicate some positive changes. Mortgage rates recently dropped to a two-year low, thanks to decreasing inflation and the Federal Reserve's jumbo rate cut in September, although they have slightly increased again in October.
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| Mortgage interest rates could head back down again in November. Getty Images |
As we approach November, several factors could influence mortgage rates.
Will Mortgage Interest Rates Fall in November?
Possibility 1: Yes, Mortgage Rates Will Fall
Despite the recent uptick in October, the average mortgage rate has decreased from 6.86% in July to 6.57% as of October 29, 2024. Some analysts predict a further decline in November due to potential Federal Reserve actions. The CME FedWatch Tool suggests a 98.4% likelihood that the Fed will cut the federal funds rate by 0.25% in early November.
Kevin Leibowitz, founder and mortgage broker at Grayton Mortgage, believes mortgage rates could drop for two main reasons:
Oversold Treasury Rates: The sell-off in the rates of 10-year treasuries has been excessive. With the Fed shifting from increasing rates to maintaining or lowering them, improvements in mortgage rates could follow.
Upcoming Fed Rate Cut: Anticipated cuts in the federal funds rate may lead to a decrease in mortgage rates.
Possibility 2: No, Mortgage Rates Will Not Fall
On the other hand, the unpredictability of mortgage rates remains a concern. After a brief dip post-September’s Fed rate cut, rates rose again in October. Sarah Alvarez, vice president of mortgage banking at William Raveis Mortgage, warns that rates are currently trending upwards.
Economic indicators suggest that inflationary pressures from the upcoming elections and strong economic data might delay meaningful relief in the mortgage market.
Should You Secure a Mortgage or Wait?
Given the uncertainty surrounding mortgage rates, deciding whether to secure a mortgage or refinance can be challenging. Leibowitz advises that if you need to act, prioritize affordability over rate. Consider whether the total housing expenses, including mortgage payments, taxes, and insurance, make sense compared to renting.
For those contemplating refinancing, Leibowitz suggests proceeding if the savings are substantial. If rates improve later, refinancing again may be possible.
The Bottom Line
While mortgage rates are an important factor when buying a home or refinancing, they are not the only consideration. Even experienced industry professionals find it challenging to predict future rates.
As Jim Davis, a partner at Aspen Wealth Management, notes, focusing on what you can control—like managing debt and ensuring your financial plan is adaptable—may be more beneficial than trying to anticipate every rate fluctuation.
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