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Interest Rates Today

Posted on April 8, 2022 by Tyler McDonald in Uncategorized

It seems the current BIG question in real estate is how the rising interest rates will impact the housing market. After seemingly bottoming-out in January 2021, the average 30-year mortgage rate has gone from a low of 2. 65 percent to 4.2 to 4.8 percent for the week ending March 26, 2022. Rising rates may slow the momentum in rising home prices, yet inflation may also help prices of real estate in the medium and long-terms. This means real estate can benefit as more people seek property as a safe haven for their money and to mitigate against inflation.

Usually, as interest rates increase, it costs more to purchase a home and demands can drop. Price appreciation may slow and homes may take longer to sell. Investors might hold onto homes which might lead to a climb in inventory. This year a new pattern may emerge. The market has been so hot that some are concerned that the rising interest rates will cause the bubble to burst. However, although the rates have begun to rise, homes are still selling nearly three times quicker than before the pandemic. Americans have been lined up to buy homes for so long that increased costs haven?t deterred any demand, at least not yet.

If you are in the market to purchase a home, the higher rates can be concerning. Knowing what to anticipate and spending time to educate yourself in making the best of the current economic environment will increase the opportunity for success when purchasing a new home or condo. As long as inflation is on the rise, the price to buy a home will still likely increase. According to The Motley Fool, projected year-over-year (YOY) housing costs will likely rise 16 percent. That means a house priced at $400,000 in 2021 will cost $464,000. Potential home buyers who saved up $80,000 (20 percent) for a down payment to buy a $400,000 house will now need to come up with $92,800 more for a down payment on the same home.

Higher mortgage rates need not stop you from buying the home of your dreams if you take an Adjustable-Rate- Mortgage (ARM). But, be aware, ARMs are not for everyone. An ARM allows the buyer to lock in at a lower-than-average mortgage rate for a set term, say 3-5 years, before the rate increases. For those who plan to move again before the lower rate expires, an ARM can be a money-saving proposition. However, a fixed rate loan might be a better option for those who plan to live in the home for a longer period.

A secret in the lending industry is that buyers do not have to settle for the rate the first lending company quotes. Shop around and ask lenders about their rates. Once an offer on a home is made and once the mortgage is approved, many lenders will allow buyers to lock in on the rate at any point in the 30-60 days following the loan approval. Rates will fluctuate, so keep track of the rates daily on a site like NerdWallet. Current world events can impact the rates quickly. Buyers will want to take advantage of possible short windows of opportunity that arise.

If you are in the market to buy or sell a home, we at Sandi Downing Real Estate would be privileged to team up with you in this exciting journey. 

Sandi Downing Real Estate

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By: Teri Whittington


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