Will Mortgage Rates Go Down? Here’s What Suze Orman Says
Written by
Gabrielle Olya
Edited by
Chris Cluff
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Mortgage rates peaked at 7.79% in October and, although they have been dropping, the average 30-year fixed-rate mortgage was still 7.22% at the end of November. That’s a far cry from the 3.5% to 4% that were the norm for over a decade.
Will mortgage rates ever be that low again? Here’s what Suze Orman has to say.
Suze Orman’s Mortgage Rate Predictions
In a recent blog post, Orman noted that we can’t know for sure if and when mortgage rates will drop, but it is unlikely that they will reach the 4% mark.
“Will rates come down? Maybe. Or not,” she wrote. “None of us know how the economy will shake out in the coming months and years.”
As Orman explained, the recent increase in mortgage rates is tied to the Federal Reserve’s rate hikes over the last two years. Even if the Fed stops raising interest rates, it doesn’t mean mortgage rates will fall, she said.
“Even if they fall, there is no guarantee they will fall enough for us to see the interest on a 30-year mortgage go down to 4% or lower,” Orman wrote. “The long-term average for mortgage rates is around 6%. Not 8%, and not 4% or lower.”
Lessons To Be Learned
While the latest rates aren’t great news for prospective homebuyers, Orman believes there are lessons to be learned from these higher mortgage rates. The first is to not wait for a “better” deal if you have a good financial opportunity.
“I know many of you nearing retirement have been planning on downsizing, but you decided to just wait a few more years,” Orman wrote in the blog post. “You just assumed the strong housing market would stay strong. But now the math has changed. You can still downsize, but you may find the market is not as advantageous as buyers who need a mortgage are squeezed by higher rates.”
The second lesson is to never wait to “break even.”
“Just because mortgage rates were below 4% for more than a decade does not mean they will return to that level,” Orman wrote. “This lesson extends well beyond mortgages. Do you own a stock, fund or ETF that has lost value, and you have come to realize it is not the right investment for you long term, but you are just waiting for the price to get back to what you paid? That is not smart.”
As Orman notes, you can’t ever assume that any investment you made will return to that price. “The better move is to consider selling and reinvesting in something that is a better fit for you.”
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