Mortgage Rates are Rising, Buy Now!

Rising mortgage rates make it difficult for more Americans to buy a home. 

Slow economic recovery after the COVID-19 pandemic, coupled with inflation and the Federal Reserve Fund money policy, has resulted in an unprecedented increase in mortgage rates since December 2021. 

On top of that, the Ukrainian crisis has also resulted in the uncertainty of the global bonds and financial market.

However, housing market experts say it is critical to look at the rising mortgage rates from a long-term perspective.

The August 2022 mortgage rate of 5.55% is a far cry from January 2021’s 2.65%. Experts forecast that the 30-year, fixed-rate mortgage will vary from 5% to 6% throughout 2022.

Interested home buyers should speak with several mortgage lenders to ensure they get the best interest rates. More home buyers are also considering adjustable-rate mortgages, as lenders offer more protections with this option.

In this article, let’s review the mortgage rate trends in  2022. By the end of this article, you’ll hopefully be able to decide if now is the right time to buy a  home.

Mortgage Rate Trends

As most people know, Charlotte, North Carolina is currently a seller’s market, which means that low housing inventory and high demand have created intense home buyer competition. To make matters worse, the rise in loan rates has made it more expensive for homebuyers to take out a loan. 

However, analysts don’t recommend that interested home buyers wait for mortgage rates to decline. While the pace of rising mortgage rates is expected to slow, the housing market will continue to favor sellers for several years.

While the mortgage rate last year was much lower, a long-term analysis of US mortgage rates shows us that the current mortgage rates above 5% are still historically low.

Factors Affecting Mortgage Rates

When purchasing a home through financing, you must research how mortgage interest rates are expected to change within the loan period. 

Typically, meager rates are only applicable to borrowers with stellar credit histories. However, mortgage rates are also affected by economic factors and the changing trends of supply and demand.

• Federal Reserve Bank monetary policy: The announcement of the Federal Reserve Bank’ to increase federal funds rate impacts short-term loans, such as adjustable-rate mortgages. The federal funds rate is the interest applied to money transfers between banks and lenders.
• Economic growth: Economic growth is determined by employment rates and gross domestic product (GDP). As the economy starts to recover after the height of the COVID-19 pandemic, higher wages and increased livelihood opportunities encourage renewed consumer spending on housing. As the demand for mortgage loans increases, mortgage rates increase.
• Inflation: The growing inflation rate also forces lenders to increase mortgage rates to compensate for the purchasing power loss of dollars. 
• Housing market: According to economists, competition for housing will continue to remain high even as mortgage rates continue to climb. However, the rising mortgage rates may deter investors, allowing more home buyers to participate in negotiations.

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What Home Buyers Can Do About Rising Mortgage Rates

Mortgage rates are slowly and steadily climbing, but what does this mean for interested home buyers in a hot real estate market like Charlotte, NC? The rising mortgage rates shouldn’t discourage home buyers because there are no indicators that rates will fall. Remember that though rates are above 5%, they’re still historically low. 

With this in mind, there are a few things home buyers can do to protect themselves from fast-climbing rates:

1. Don’t wait for rates to drop: While waiting out the seller’s market may be tempting, it’s not a wise decision. Remember, rates are moving fast, and waiting for too long will force you to choose from less favorable property options.
2. Shop around for lenders: The only way to protect yourself from climbing mortgage rates is to compare the rates from different lenders. According to the Consumer Financial Protection Bureau (CFPB), rates from various mortgage lenders can vary as much as 0.5% for qualified borrowers. Simply getting quotes from a handful of lenders can save you thousands of dollars in interest throughout your mortgage plan.
3. Stay updated on rate fluctuations: Rates can climb significantly in just a few days, so stay in touch with your chosen lender throughout the home purchasing process. It’s recommended that you check in every 10 days to compare against the rates you previously approved. Unlock priority access to new listings matching your criteria. don't miss out! https://showcaserealty.net/hot-new-listings/
   
   

Are Interest Rates Expected to Rise Anytime Soon?

Homebuyers who can afford to buy now should lock in the current mortgage rates sooner than later, especially since current rates are below 6%.

Though mortgage rates are above 5%, that’s still half the historical average since the 1970s. Even if rates climb one percentage point and surpass 6%, they won’t be considered high-interest rates in the long run.

Slowing price growth shouldn’t be mistaken for declining housing prices. As mentioned, housing values are expected to grow at a slower pace. If buyers choose to buy later, the effects of inflation will have spread to more consumer goods, reducing their capacity to allocate funds for other expenses.

Are Adjustable-Rate Mortgages a Good Idea?

In the past two decades, adjustable-rate mortgages (ARM) earned a bad reputation after lenders gave them to unqualified borrowers. Most of these borrowers couldn’t make higher payments when mortgage rates spiked.

In recent years, though, more home buyers have found adjustable-rate mortgages more attractive. This is because lenders are offering more protection against rising mortgage rates. For most lenders, locked mortgage rate periods last for five to ten years before they can climb. Lenders also provide price caps on maximum mortgage rate increases. Essential tips before you buy a home. Click here!

Conclusion

While most home buyers are discouraged by rising mortgage rates, this shouldn’t deter them from entering the home-buying process. 

Although mortgage rates are above 5%, it’s still a few percentage points away from 6%. Even then, a 6% mortgage rate is considered low. Though mortgage rates are increasing slowly, there’s no indicator that rates are declining. Analysts expect mortgage rates to rise steadily throughout 2022.

To get pre-approved for a loan, you’ll need the expert help of a local real estate agent like myself, Nancy Braun of https://showcaserealty.net/. I’ve worked with several reliable lenders, and I’ll be happy to guide you through the mortgage and home-buying process. I guarantee to help you close deals quickly at an affordable price.