As mortgage rates fluctuate, is now the best time to get a good rate?

Suddenly, mortgage interest rates are falling. Then they are standing. What is a consumer supposed to do?

Watch and probably wait.

“This is still a time of extremely high volatility, so rates can go up and down quickly on short notice,” said Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association.

Remember, said Jacob Channel, senior economist at LendingTree, which tracks and analyzes rates: “People struggling to afford a home at 7% will likely still struggle at 6.5%.

Mortgage rates had risen steadily since the start of the year, coinciding with the Federal Reserve’s decision to continue raising its key rate to fight inflation.

A year ago, the average rate for a 30-year fixed rate loan was 3.05%. Rates have continued to rise this year, peaking so far at just over 7%.

But in mid-November, the rate suddenly took one of its steepest plunges in decades. Freddie Mac’s weekly lender survey found the mid-November average rate for a 30-year fixed mortgage was 6.58%, well below the peak of 7.08% two weeks earlier. early. Rates have risen slightly, but this week they are back down to 6.49%.

“Mortgage rates have continued to fall this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes,” a statement from Freddie Mac said. buyer demand as we enter the final month of the year.

The data used in this interactive map, collected from Freddie Mac – Primary Mortgage Market Survey, was updated on Thursday. Here are the average mortgage rates by loan term between December 2021 and December 2022:

That half-point drop from the peak means a homebuyer would save $250 a month on a median-priced home in the state. The median price in California last month was $801,150, down 2.5% from September.

Lower rates, combined with other factors, should mean now is a good time to buy a home, said Jordan Levine, vice president and chief economist for the California Association of Realtors.

“There are more homes on the market for these buyers to choose from,” he said, “and more sellers are willing to negotiate with them, which can also be an incentive to take advantage of falling prices. rate. “

But will rates go up?

However, it is very uncertain whether the stable or lower rates will persist. The Federal Reserve is expected to raise its key rate again at its mid-December meeting.

One of the reasons rates have stabilized is that the cost of living has not risen at the brisk pace this summer. Prices rose 7.7% in the year to October, but that was less than the annualized 8.2% recorded in September and 8.3% in August.

Lenders “may have gone a bit too far in raising rates,” Channel said, fearing they needed more inflation protection.

Predicting the precise future path of rates is nearly impossible, he and others said. But they tend to agree that consumers shouldn’t try to “time” the interest rate market and jump as soon as a rate drops.

Kan, the chief mortgage bankers economist, saw an average of 6.7% in the current quarter as he sees data suggesting a slower rate of inflation, slower wage growth and other signs that the US and global economies are cooling.

Forecasts tend to be fragile. “On the one hand,” Levine said, “inflation has eased slightly and the likelihood of a recession is perceived to be higher.”

But, he added. “Looking ahead, inflation is still relatively high, so I think we could still see another (Fed) rate hike or maybe even two smaller ones, so mortgage rates will likely rise to again at some point.”

Brianna Taylor contributed to this story