What’s the Deal with Mortgage Rates in Indiana?

Mortgage rates across the country and the rest of the world have seen dramatic changes over the last few years, including mortgage rates in Indiana. 

Buying a home in the “Crossroads of America” can be a challenge even at the best of times, but many Hoosier homebuyers continue to find it rewarding.

Finding the right time to buy a home can be a challenge. Whether through a conventional mortgage, FHA loans, VA loans, or any other type of mortgage product—current and future mortgage rates will greatly influence your timing. 

As National Association of Realtors Chief Economist Lawrence Yun puts it: “mortgage rates are the lifeblood that drives the home sales.”

When rates move a few points up or down, it could mean saving or spending thousands of dollars extra on your mortgage, even if the home price itself doesn’t change.

So the big question for Hoosier homebuyers or current homeowners is—what is happening with mortgage rates in Indiana?

Current trends and insights for Indiana mortgage rates

According to Freddie Mac, the holidays haven’t slowed the downward trajectory of mortgage rates that started about six weeks ago.

However, new data indicates that homeowners are still hesitant to list their homes. 

Many of these current homeowners are carefully considering their options since, as some estimates have indicated, more than two-thirds of mortgage holders have a fixed-mortgage rate of less than 4%.

Yun speaking at the 2022 Real Estate Forecast Summit on Dec. 13, 2022, said there were some “hopeful signs related to what’s going to happen early next year.”

Mortgage rates, he pointed out, had been falling consistently for the last four weeks. 

This trend is projected to continue due to December’s data that shows consumer inflation is coming down. The Fed, however, is generally expected to raise rates again. 

This data will likely ease the pressure on the Federal Reserve to aggressively raise interest rates again in the immediate future.

What mortgage experts are saying about future rates

Mortgage rates and the overall future of any aspect of the economy are notoriously difficult to predict. 

Despite that historical trend, we’ve put together up-to-date insights from some of the country’s top real estate and mortgage experts to see what they are saying about future rates.

Possible decline of mortgage rates soon

During his presentation to the NAR summit attendees, Yun pointed out how the close relationship between the 30-year fixed rate and the 10-year treasury yield shows an unusual spread.

“It’s inevitable that this abnormally high spread will begin to narrow, which means that there is even further room for mortgage rates to decline in the upcoming months as this spread narrows.”

Is now a good time to refinance in Indiana?

While being interviewed on CBS news on Dec, 22, Mike Fratantoni, the chief economist at Mortgage Bankers Association (MBA), pointed out that the real estate world is much different today than it was a year ago.

At the beginning of the year, interest rates were at 3% but are hovering around 6.3% now. A slight decline from the 7% we saw just a month prior. 

What happened in 2020 and 2021 was that millions of homeowners were able to realize substantial savings by refinancing when interest rates were at record lows.

“At this point, 90% of homeowners will have a rate of 4% or below, so 6.3% is not going to be attractive to people who have refinanced over the last couple of years,” Frantantoni said. 

Refinancing could be a good idea for someone who bought their home recently, however, Frantantoni added.  

The housing market in Indiana

Overall, existing home sales across America were down 7.7% last month, the tenth-straight monthly decline.

Certain factors could come into play, however, that might reverse that trend. 

Fratantoni points out that the major first-time homebuyers demographic of 28 to 38-year-olds (which totals around 50 million people) will likely be the ones to keep the lenders busy over the next couple of years.

The forecasted economic challenges—possibly a rising unemployment rate and slowing wage gains—coupled with the decline of housing inventory will add more barriers to attracting these buyers.

But, according to Fratantoni, there is only a 3.3-month supply of housing. 

Buyers in the springtime will likely have a slightly easier time finding a home as some more homes are expected to enter the market.

For those who are interested in buying a home, this could easily mean that now is the best time to contact their mortgage lender and see what sort of game plan can be created for the spring.

Figure out your monthly payments with a mortgage affordability calculator

A crucial aspect of your homebuying game plan is calculating how much of a monthly mortgage payment you can afford.

Some people mistakenly think this is a straightforward percentage of your monthly income. In fact, Indiana mortgage lenders will delve into your debts and income details much deeper than a simple ratio.

Seasoned homebuyers often realize that an affordability calculation can examine your financial picture in much greater detail. 

Many lenders use the same metrics and financial factors as most online affordability calculators to discern what kind of mortgage they can approve for their clients.

Some of these details might include the following:

• Down payment amount
• Credit score
• Loan term
• Proposed mortgage interest rate
• Insurance premiums
• Closing costs
• Loan type (i.e., adjustable-rate mortgage or 30-year fixed)

Alternatively, many borrowers choose to skip to the front of the line and have a prequalification or preapproval done.

Get Started with a preapproval from Homefinity

Prequalification and preapproval are two of the earliest and most important steps homebuyers can take when starting their homebuying journey.

Prequalification means you get a professional estimate of the loan amount you could afford and potentially qualify for. Like a mortgage calculator, this assessment does not carry as much weight as an official preapproval since the information is based solely on the borrower’s claims.

Preapproval, on the other hand, is a much more detailed process that backs your financial status up with documentation. B

Both mortgage lenders and home sellers know that a borrower with a preapproval in hand is much more likely to be a reliable bidder to choose in the end.

Contact Homefinity to get started and discuss your best mortgage options.

Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.

Photo by Mikhail Nilov