Mortgage Rates Dip, Potential Rate Cuts Loom: Here’s how to Prepare
Washington, D.C. – Mortgage rates have fallen to an 11-month low, offering a glimmer of hope for prospective homebuyers and perhaps signaling a shift in the housing market. The average rate for a 30-year, fixed-rate mortgage is now just under 6.3% as of Friday, according to Mortgage News Daily, already down significantly from over 7% in January. Experts suggest that if the Federal Reserve begins cutting rates – potentially as early as 2025 – conditions could improve further. Here’s how to position yourself to benefit.
the anticipated easing of monetary policy by the Federal Reserve, with a possible first rate cut in 2025, is contributing to the current decline in mortgage rates. While the Fed‘s actions influence broader economic conditions, individual homebuyers can also take proactive steps to secure the best possible loan terms.
“Over the last several weeks,the consumer sentiment around mortgages has become a little healthier,we are starting to see some nice momentum,” said John Hummel,head of retail home lending at U.S. Bank. Increased buyer activity is also contributing to a slight increase in housing inventory, and “if we see some additional rate cuts, that bodes well as we get into the later half of the year.”
4.Improve your credit score
Securing favorable mortgage rates hinges significantly on creditworthiness. Those with better credit qualify for the lowest interest rates.
Boosting your credit score involves consistent on-time bill payments, maintaining low balances, and avoiding unnecessary credit applications, according to Tommy Lee, senior director of scores and predictive analytics at FICO. generally, keeping revolving debt below 30% of available credit is advisable, and ”don’t go out and open 10 credit cards,” Lee said.
Regularly reviewing your credit report for errors is also crucial. “Even a single late payment on your credit report can knock 50 points or more off of your credit score, so if there’s one listed wrongly on your report, you need to get it fixed,” added schulz. The difference between a “good” score (above 670) and a “very good” score (over 740) can unlock the most favorable terms. (FICO scores range from 300 to 850.)
“It is meaningful for people to understand that they can have a far bigger impact on their interest rates than the Fed ever will,” Schulz said.
