5.36% for a 30 year mortgage? Is the red hot housing frenzy over?

Mortgage rates have been rising in recent days and remain high today. After two weeks of decreases, the average 30-year fixed mortgage rate rose to 5.36 percent today. Despite being lower than its recent peak of 5.81 percent, rates are still at levels not seen since 2008. The interest rate on 30-year fixed mortgages has stayed close to near record lows from 2013 to 2021 but started rising since the start of this year. Currently, the 30 year fixed mortgage rate is averaging at 5.4% owing to different economic factors whereby inflation is the most dominant one. However, considering how the mortgage rates have trended over the last few decades, it is still relatively lower due to rising house prices, stricter credit rules, and a decreasing surplus of unsold properties.

High inflation has pushed up mortgage rates this year. The Federal Reserve ("the Fed") is the United States central banking system, and almost everything it does has an impact on your financial decisions. They have been raising the federal funds rate in an attempt to combat price growth, but many experts are now concerned that the central bank will be unable to control inflation without causing the economy to enter a recession. If the United States enters a recession, mortgage rates may fall slightly.

The inflation rate in the United States is expected to be 8.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts' expectations. 

Builders expected home sales to taper off as mortgage rates rose. They were however surprised by the swift response from buyers in different markets across the country. Mortgage rates began to rise from historic lows in the second half of 2021 and may continue to rise into 2022. This is due in part to high inflation and policy responses to rising prices. The Consumer Price Index increased by 9.1 percent in the previous year. The Federal Reserve has been working to control inflation, and it intends to raise the federal funds' target rate four more times this year, following increases in March, May, and June. Though not directly related to the federal funds rate, mortgage rates are frequently raised as a result of Fed rate increases. Mortgage rates are likely to remain high as the central bank continues to tighten monetary policy to reduce inflation.

How to score a deal in this dying mortgage market?

1- It can be difficult to determine whether a lender is providing you with a good rate, which is why it is critical to get pre-approved with multiple mortgage lenders and compare each offer. Request pre-approval from at least two or three lenders.

2- The only thing that matters is your rate. Make sure to compare both your monthly costs and your upfront costs, including any lender fees.

3- Although mortgage rates are heavily influenced by economic factors beyond your control, there are some things you can do to ensure you get a good rate:

• Consider using a mortgage broker. Having an expert on your side is never a bad choice, especially one you don't pay from your pocket. They will shop around for the best terms in your tailor-made scenario and ensure you are served the very best mortgage option. 
• Consider the difference between fixed and adjustable rates. If you plan to move before the introductory period ends, you may be able to get a lower introductory rate with an adjustable-rate mortgage. However, if you're buying a forever home, a fixed rate may be preferable because you won't have to worry about your interest rate rising later. Examine the rates provided by your lender and weigh your options.
• Examine your financial situation. The lower your mortgage rate should be, the better your financial situation. Look for ways to improve your credit score or, if necessary, lower your debt-to-income ratio. Saving for a larger down payment is also beneficial.
• Select the best lender. Mortgage rates vary depending on the lender. Choosing the best one for your financial situation will land you the best rate.

Home prices are expected to rise even more this year, just at a slower pace than in the past two years. Fewer buyers will enter the market, which will cool demand and put downward pressure on home price growth.