Lenders in our area have been talking about this issue for some time – mortgage interest rates are on the rise again after years of being at a standstill.
Interest rates are projected to increase to an average of 5% for a 30-year mortgage and 4.4% for a 15-year mortgage.
So, what does this mean for Buyers?
It’s been seven years since mortgage rates were this high. But despite that, it doesn’t mean the economy is in trouble. It actually means the opposite.
To help stabilize the strong economy and rising inflation during the past few years, the Federal Reserve increased short-term interest rates. It’s somewhat natural to see a trickle-down effect to the bank level like what we’re seeing now with mortgage interest rates.
The increase basically means more people are willing to spend and borrow.
Still, expect things to be a little different next year as Buyers and Sellers adjust to these changes.
What Higher Mortgage Interest Rates Mean for Sellers
Plan for your house to be on the market a little longer and prepare to possibly receive fewer offers.
A mortgage is a big commitment, and adding higher interest rates to the mix will make many Buyers pause and think.
It’s more important than ever to partner with a real estate agent who understands the current market. They’ll help you set expectations for how much you can make, and how long you’ll have to wait for the right offer.
What Higher Mortgage Interest Rates Mean for Buyers
Even though mortgage interest rates are the highest they’ve been in a while, they’re still relatively low. If you’re not buying with cash, try, if you can, to go for a conventional 15-year fixed-rate mortgage. That way, you know exactly what your payment will be over the life of the loan.
Here at Solutions we always recommend speaking with at least three local lenders, along with the online lenders that many people are turning to.
We have found that having someone local comes in handy when issues come up so problems can be quickly solved and closings can continue as planned.