Over the past year, the real estate landscape in South Bend, Indiana has witnessed a transformative shift, primarily influenced by the evolving mortgage rates. In the last nine months, the city has experienced a notable decline in the number of homes sold each month, and a deceleration in the growth of home prices. These changes are directly attributed to the doubling of the average 30-year fixed mortgage rate this year, significantly impacting the homebuying potential of residents in the South Bend area. In an interesting development, this month saw the average mortgage rate briefly exceeding 7%, before settling back into the high 6% range. Nevertheless, we are on the brink of gaining insight into what mortgage interest rates might look like in the South Bend real estate market for the coming year.

Inflation: A Pivotal Factor for South Bend’s Mortgage Rates

The trajectory of mortgage rates in South Bend is intricately connected to inflation rates. Recent indicators suggest that inflation may be showing signs of cooling in the past couple of weeks, offering a glimmer of hope for the local real estate market. The housing industry in South Bend eagerly anticipates positive news regarding inflation, as Ali Wolf, Chief Economist at Zonda, emphasizes: “As we move towards 2023, the South Bend real estate market is expected to confront ongoing uncertainties, mirroring the challenges faced by consumers, financial markets, and policymakers in today’s economy. We closely monitor the MBS market for signs of increased stability, indications of inflation moderating, or a more tempered approach by the Federal Reserve. Such developments would instill confidence that mortgage rates have reached their peak.”

What Lies Ahead for South Bend Mortgage Rates?

As South Bend navigates the inflation challenge and contemplates a potential downturn, it is plausible to expect mortgage rates in the city to follow suit. In recent weeks, there have been subtle indications of this shift. As the Federal Reserve works diligently to control inflation, South Bend’s mortgage rates are poised to decrease. Bill McBride from Calculated Risk offers his perspective: “My current outlook suggests that inflation will recede faster than the current Fed projections anticipate.”

With an eye toward the next year, we can only hope that this prognosis proves accurate for the South Bend real estate market.

The Bottom Line for South Bend

Mortgage rates in South Bend are destined to decrease; it’s only a matter of time. The key to this outcome lies in the continuous positive progress on the inflation front, which will ultimately result in more affordable mortgage rates for South Bend residents. This, in turn, will empower potential homebuyers in South Bend and contribute to an increased number of homeowners in the city.