Maybe! But the journey isn't always a straight line :)

Rates did peak over 8% for most clients this last month, and over the last week they have dropped again to mid-to-low 7's%, which is welcome news! 

Why did this happen? And what needs to happen to see consistently lower rates in the future?

**For a more technical synopsis, see this link!**

Ready for a fun ride? Here are the reasons I do NOT expect rates to hit 3-5% any time soon, but rather closer to 6% by the end of 2024!

• When the pandemic hit, our government wanted to boost our jobs and economy any way it could, since unemployment skyrocketed. The government bought mortgages from lenders to artificially lower / subsidize rates. The Fed and banks ended up buying $2.5 trillion dollars worth!! That is a lot of money. Since mortgage bonds were in such high demand, lenders didn't need to raise rates to make the investment more attractive to investors.
• Lenders originate the the mortgage, but investors buy the mortgages and collect the interest payments! 
• The government also made it basically free for banks to borrow money from them, and if banks get money for “free” they’ll lend it out for close to “free” as well.
• The government did all of this stimulus to help the jobs market. If the housing industry was doing well, then insurance agents, title companies, builders, builder suppliers, lenders, realtors would also do well! That is a lot of new job creation happening.
• This was a disaster relief plan! Not a replicable event!
• Once our country had navigated its way out of the pandemic, inflation started to rise rapidly around the same time.
• These emergency measures actually helped cause inflation, which makes mortgage rates go up!
• Once inflation eventually goes down, and stays down, experts predict a 6% mortgage rate by the end of 2024.
• Not only does inflation need to go down, but consumers need to be able to believe inflation will stay down for a while, that way the market can plan on it. This part can take a while, and there are spikes sometimes (if gas prices shoot up, for example).
• Unless we have another crisis or recession, its unlikely rates will go lower than 6%, considering it required a pretty massive subsidy to make it happen the last time!
• So, the question is, if you’re otherwise ready to buy a house, what are you waiting for?

This may feel like a big "bummer", or maybe not the news you were looking for - but here is the silver lining!

• If other people are scared, and choosing to not buy, that means it is a perfect opportunity for you to purchase a home with less competition.
• If you do choose to buy now, you can refinance if/when rates do go down.
• If you love the home and can afford the payment, then that is the recipe for success!
• We do expect property to appreciate 3-5% per year over the next 5 years, which is about $1,250/month for the average Milwaukee home! Even if your mortgage payment is higher than you'd like it to be, avoiding rent and buying a house can be a wealth-building strategy!

Have questions on this? Don't hesitate to call/text at 414-488-0438!