Why are Mortgage Rates Still Going Up?
As we head into November 2022, people are noticing that the real estate market is still on fire. With low inventory and continued high demand, now is a great time to consider selling your home.
However, what about potential home buyers? The Fed recently approved another rate hike…and the mortgage rates still continue to climb.
Here is everything you need to know about why mortgage rates are still increasing:
Response to Inflation
Inflation continues to still be an issue for the majority of Americans. With endless increases, everything seems to be touched by rising prices including but not limited to:
- Home prices
- And more
With inflation continuing to rise, mortgage rates continue to follow suit. The Federal Reserve hiked rates back in 2021 and although they believed it to be temporary, that seems to not be the case.
How Much Higher will it Go?
30-year fixed mortgage rates are tending to stay around 6.95%. For the average interest rate for a 15-year fixed mortgage, 6.29% remains steady. Economists are predicting interest rates will increase to the 7% range for the remainder of the year.
If inflation begins to get under control, the Fed may drop the rates below 7%. If not, they are likely to raise the rates by 75 basis points—meaning mortgage rates will surpass 8%.
What Should House Buyers Do Now?
Although the market feels tough, it may still be a good time to buy if the conditions are right. As the rates continue to increase, the faster you begin your home search, the better chances you have of securing a lower mortgage rate.
As rents across the country continue to reach record highs and housing prices increase, it is becoming harder for people to purchase a home. Experts advise jumping at the opportunity if eligible as the Fed more than likely will raise the interest rate yet again this year.
Tips of the pros for home buyers include:
Set a Maximum Purchase Price
Do not look outside what you can readily afford. Be sure to factor in the price of the mortgage rate interest after speaking with a mortgage loan officer. You don’t want to be “house poor”.
Buy Now, Refi Later
It is better to buy now when you’re eligible and refinance the home later than wait until the interest rates go down—as they may not be any time soon. If you can afford the mortgage now, you will be putting your money into your own investment that you can refi later versus paying high rent to someone else’s investment.
If you are eligible, it is a great idea to buy a home NOW. The Fed will undoubtedly raise the mortgage interest rates again this year in response to inflation.
If inflation is not under control, they will continue to hike the rates. Rent prices continue to climb so investing in your own home may be the right choice.