What to expect with mortgage rates over the next few months

If you’ve been waiting to pull the trigger on a new house purchase or a refinance and you’re waiting for an interest rate you may get your wish over the course of the next couple of weeks. That said that’s not without some potential risk you otherwise might incur by waiting for what may or may not come.

If interest rates move by .375% to .5% on average that translates on most loan amounts somewhere between $60-$85 per month. If $60 to $85 a month is enough for you to sway your decision to refinance or to purchase when you already might be getting a benefit based on current market interest rates than waiting may be possibly better, but the risk is giving up the current savings or the benefit today for what might not ever come down the line. The reality of it is waiting for a lower interest rates is a fool’s game if there’s already a net tangible benefit for you to take out a mortgage today. The reality of it is no one truly knows what’s going to happen with mortgage rates. All we have is yesterday news which is at best a remote indicator for the future.

Here is what generally happens from beginning of November through January of the New Year. During this time of year as a precursor to Christmas leading up to Thanksgiving with Black Friday, retail sales data, consumer optimism, and Fortune 500 companies gearing up to maximize profits at the end of the year to appease shareholders. These events usually come in the form of rallying stock market and for a stock market to rally, that must come from the liquidation of something which is the bond market.

 

When this event transpires and the stock market rallies, mortgage bonds (fixed-income securities) sell-off driving the yields down and their rates to the consumers up while the stock market performs. When we receive negative economic information the opposite happens and people sell off their stocks and they move their money into something where they can get a longer return on their money and that place is the fixed-income market bond market driving the yields up and the rates to consumers on mortgage down.

Presently, we have the lowest unemployment in the history of the United States. This is acting as support for investors on Wall Street continuing to pour their money into the stock market as a result that is not spelling good news for the future of mortgage rates. However, at this time we also have impeachment proceedings and the impeachment proceedings can be construed as bad news by the markets because this is perceived as bad economic news because President Trump is pro-capitalism in which the stock markets thrive on. As a result, it is possible rates could get lower in the coming weeks by .25-.375 (maybe) if the news is perceived as negative by the markets. It’s very 50/50 at this point.

So, what do you do? Most mortgage companies have a policy where they will let you either float down or renegotiate the interest rate with the investor if mortgage rates drop in the process. This might be something to look for when selecting a quality mortgage company to handle your home financing. Talk to someone who is experienced (hint it is not the big online lenders). The other things that you might want to think about doing is getting your loan process started, getting your appraisal ordered, and locking your rate when Market timing warrants doing so, this is a little bit risky because you’re taking the gamble with your future cost of funds for what may or may not transpire in the economy versus locking in something right now which otherwise offers an exceptionally low rate given current bond market yields.

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When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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