Expected Mortgage Rates

Consumers are wrong.  I know, the customer is always right, but let me explain.  Consumers expect 30-year mortgage rates to hit 8.7% in 2025 and 9.7% in 2027.  The Federal Reserve of New York has done this survey of consumers for years.  I went back to look at what these expectations were over the past 10 years compared to the actual rates.  As it turns out, consumers are not good about predicting mortgage rates.  To be fair, neither are the “housing experts.”  When looking out both one and three years, consumers generally expect rates to be about two points higher than they turn out to be.  Another interesting thing I discovered is that regardless of the current interest rate at the time, consumers always predicted rates would be higher in the future.  So while I don’t have a crystal ball, this survey is a good indicator that we won’t see 8.7% next year.  

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