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Every December, economists make predictions about next year's mortgage rates. Every December, they're mostly wrong. Here's why—and what actually matters.
The Prediction Problem
In December 2021, experts predicted rates would stay around 3.5% for 2022. They hit 7%. In December 2022, experts predicted rates would fall to 5.5% by end of 2023. They stayed above 6.5%. The track record is... not great.
What Actually Moves Rates
Mortgage rates follow the 10-year Treasury, not the Fed funds rate. The Fed controls short-term rates. The bond market—driven by inflation expectations, global demand for US debt, and investor sentiment—controls long-term rates. The Fed can influence but not dictate.
What This Means for You
If you're waiting for rates to drop before buying, you might be waiting a long time. And even if rates drop, prices will likely rise in response (more buyers = more competition = higher prices). The math often works out the same.
Marry the house, date the rate. You can refinance later, but you can't time the market.
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