Mortgaging the future

After months of stagnation, things should be looking up for real estate in Arkansas and across the country. Mortgage rates are coming down as this is being written.

According to the Associated Press, last week’s average long-term mortgage rates edged lower for the first time in five weeks. The average rate on a 30year mortgage dropped from 6.94 percent to 6.88 percent. However, rates are still higher than they were a year ago when the average rate was 6.73 percent.

Mortgage rates increased for most of February as stronger-than-expected reports on inflation and the economy fueled speculation among bond investors that the Federal Reserve would have to hold off on cutting interest rates longer than expected.

These things matter. Expectations for future inflation, global demand for what the U.S. Treasury and the Fed does with interest rates play a role in influencing home mortgage rates.

Fed Chairman Jerome Powell said rates will likely be cut this year, but the central bank first needs to see more evidence that inflation is cooling, which has already dropped from roughly 9 percent to about 3 percent, but short of the 2 percent target set by the Fed.

Anyone who has ever bought a house understands how much difference movement in the right or wrong direction can impact a monthly mortgage payment, and when they’re high, the housing market suffers. When they’re lower, real estate thrives.

There’s a reason they call economics The Dismal Science, This is all boring stuff. Until the time comes to make a house payment.