Anyone that is looking to buy a property these days is more than likely following the current mortgage rate trends if they plan to finance it. With home prices holding strong, changes in mortgage rates are really affecting what homebuyers can afford. Where loan rates had been historically low for years, now is a great time to look at the big picture of where rates have been, where they are now and where they are potentially headed to put things into perspective.

Freddie Mac has been tracking 30 year fixed rate mortgages for decades dating all the way back to 1971. They share the results from their mortgage market survey weekly which averages mortgage application information from all across the United States.

While rates have increased a handful of points over the past year or so, they are still below the 52 year average. This may be interesting overall but today’s buyers are still trying to adjust to rates that are around 7% where they were between 3 and 5% for quite a while. This is still a far cry from the 18% we saw in the early 1980’s. Regardless, a dip in rates these days would certainly be welcomed by today’s challenged buyers. Let’s take a look if this is realistic by examining inflation.

The Federal Reserve has been working to lower inflation since the beginning of 2022. This is important to realize as there is a connection between inflation and mortgage rates. If we look at trends of inflation and interest rates we see their patterns are most often similar. When inflation has gone up or down over the past few decades, mortgage rates followed suit soon thereafter. Recent tracking of inflation shows that it has moderated a bit this year, but we have yet to see mortgage rates follow along with their similar pattern. But if history has proven to be a guide, then we should anticipate rates dipping soon too. While nobody has the ability to predict the future, it is helpful to study past trends so we know what we can realistically expect.