Do you know what drives mortgage rates?  

Nope, it’s not the Fed. It’s inflation.  

Inflation hit a 30-year peak in late 2022, so that’s why mortgage rates skyrocketed.  

Things seemed really bleak for a while, but I’m here to share the good news that inflation is improving, which has been helping mortgage rates improve as well. 

On May 10, we had an encouraging drop in the Consumer Price Index or CPI inflation report. This index measures the current prices of goods versus what we paid for the same goods last year.  

With the Fed raising rates over the last four quarters, inflation is expected to continue to cool off! I know this is going to be well received when we go to the grocery store, but it will also be phenomenal for the housing market and home loan rates as well.

Over the next two months, as inflation and mortgage rates improve, this will increase buyer demand into a very tight inventory environment. This means home prices will surge higher, so it might be wise to get ahead of this positive news and act sooner than later on purchasing a home. 

Remember, the price you pay for a home will never change, but your home loan rate can. So lastly, here’s my expert advice if I were considering buying a new home anytime in the next year or two, this is what I would do:

Step 1:  Buy a home at lower price now before values skyrocket

Step 2:  Finance at the current market rate (somewhere in the 6% range)

Step 3:  Enjoy your home while you wait for rates to drop

Step 4:  Refinance and save potentially hundreds a month

Step 5:  Enjoy your home long term knowing you saved on the purchase price and on the interest rate!

You can thank me later!

About the Expert:

Donnie Eden is a licensed mortgage planner and the owner of Prosperity Mortgage Advisors in White House, Tennessee, founded in 2015. He has his BA in Economics from The University of Tennessee and has helped over 5,000 families so far throughout his career.