After months and months of rate increases, the Federal Reserve may finally be seeing the results of its efforts to calm inflation. The November 14, 2023, Consumer Price Index (CPI) slowed to 3.2%.  Though still above the Fed’s targeted 2%, the reading came in lower than expected.  So, what will cooling inflation mean for interest rates and the Oregon housing market? Here’s how cooling inflation may impact the Oregon housing market.


Inflation and Mortgage Interest Rates: Correlation, but Not Direct Causation

It may seem as if increasing mortgage interest rates are caused by inflation rates. This isn’t technically true. It’s more accurate to view mortgage interest rates as correlated with inflation.  Consider this real-world scenario:


Inflation began in earnest in 2021 as the world dealt with the COVID-19 pandemic.  By the summer of 2022, inflation had reached 9% in the U.S. To cool inflation, the Federal Reserve began increasing the Fed Funds Rate. Simultaneously, mortgage rates began to increase. So, mortgage interest rates rose in response to the actions of the Federal Reserve, as opposed to inflation itself.  


However, there are other contributing factors to high mortgage rates and a slowdown in the Oregon housing market.  An imbalance in supply and demand has also kept mortgage rates higher than in recent memory.  The imbalance is due in part to a housing shortage nationwide. It’s exacerbated by the fact that those who might otherwise move into a larger home or downsize into a smaller home are reluctant to exchange lower interest rate mortgages for higher interest rates on a new home.


Understanding the Oregon Housing Market

It is impossible to predict whether inflation will continue to cool. It’s also unclear when or if the Federal Reserve may reverse course and cut the Fed Funds Rate. In other words, although interest rates have been declining recently, there is no guarantee they will continue to drop.


However, it is well documented that the Oregon housing market will remain lean until more homes are built. Unfortunately, Oregon currently ranks in the top five states that have underproduced homes, according to reports. Therefore, if you want to buy a home in Oregon, it’s best to follow these tips to ensure that when you find the home you want, you can make it yours.


  • Talk with a Mortgage Broker Now

Rather than waiting for rates to decrease or your dream home to come on the market, schedule a free consultation with a mortgage broker now. They will provide you with troves of invaluable information that can help you begin planning to succeed in the Oregon housing market in the future.


  • Pay off Debts

While waiting to buy a home, it’s a great idea to begin chipping away at other debts. But, when you pay off a credit card, for example, keep the account open.  Closing credit lines reduces your available credit, which lowers your credit score. So, pay down the accounts, but keep the accounts open.


  • Continue to Save for a Down Payment

There are many loan options that do not require 20% or even 10% down payments. However, the more you can afford to put down on a home, the more mortgage loan options you’ll have to choose from, and you may get a more favorable rate.


  • If You Love a Home and Can Afford a Home, Buy it Now and Refinance Later

If you’re able to buy a home that you love, it’s probably best that you buy it now. With a housing shortage likely extending into the future, there’s no guarantee you’ll find another home you love later. Remember, current mortgage interest rates are nowhere near all-time highs.  So, it may be worth it to pay a bit more now to get the house you love than to wait for a lower rate and lose out on a perfect home.


Get Pre-Approved for a Mortgage in Oregon

For a free, no-obligation mortgage consultation, contact Strategic Mortgage Solutions today. As a top-reviewed Eugene-based mortgage brokerage, we provide FHA, conventional, jumbo, VA, USDA, construction, and manufactured home loans.  Message us for more info or call 541-275-1148.