It is no secret that mortgage rates have been incredibly volatile for the past few years. Some of the largest ever individual intra-day or intra-week shifts have taken place during this timespan.
While the mortgage sector in the United States has been expecting a return to normalcy (less volatility) in 2024 that has not happened thus far and this no longer appears to be as likely as originally thought.
Interest rate volatility is difficult for both industry professionals and consumers. For industry professionals, it makes completing a pre-approval more challenging (specifically when max qualifying). It also makes it considerably harder to properly set expectations with a client and provide accurate rate quotes. For consumers, it makes shopping for a mortgage more challenging because it is harder to evaluate which lender is providing the best deal.
Frankly, there is no great way to combat interest rate volatility. That said, it does place a premium on trusting one’s instincts/experience and working with a reputable lender. A good lender will have tools to track the mortgage markets allowing them to make educated predictions of short-term fluctuations and know when major economic events are coming up. No lender has a crystal ball but every lender can make sure their clients are aware of what is happening and give their professional opinion.
At the end of the day, the reality is that interest rates do not stay high or low forever. While the general consensus surrounding volatility is waning, the general consensus that rates will drop/decrease sometime in the next few years remains the same. Rather than focusing on every little short-term fluctuation the more prudent move would be to ensure you are in a position to take advantage of when rates do drop.
Focusing purely on an interest rate when buying a home is like focusing only on the exterior color of the house. Does it matter? Absolutely, but it can always be changed later on when the timing is appropriate. The important thing is that you lock up that house considering how historically low the inventory is (but that is a discussion for another blog).
If you have any questions feel free to give us a call.
