Are Higher Mortgage Rates Here To Stay?
Recent increases in mortgage rates have been making headlines lately, and you might have noticed that they've reached their highest point in over two decades, as depicted in the graph below.
If you're considering a significant move, this news might feel a bit disheartening. You might be wondering whether it's wise to delay your plans. Here's what you need to understand.
The Impact of Higher Mortgage Rates
There's no denying that mortgage rates are currently higher than they've been in recent years. When rates go up, it directly affects the overall affordability of homes. Here's how it works: as rates rise, the cost of borrowing money to purchase a home increases. Consequently, your monthly mortgage payments for your future home loan also go up.
The Urban Institute provides insight into how this is affecting both buyers and sellers:
"When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes. Furthermore, higher interest rates can result in fewer homes on the market, as existing homeowners have a motivation to retain their homes to preserve their low-interest rates."
In essence, due to the current mortgage rate situation, some individuals are reconsidering their plans. But the real question is: is this a sound strategy?
What to Expect with Mortgage Rates
If you're eagerly awaiting a drop in mortgage rates, you're not alone. Many people share that sentiment. However, here's the reality: no one can accurately predict when or if it will happen. Even experts can't provide a definitive forecast of what lies ahead.
Projections may suggest that rates will decrease in the coming months, but recent data indicates that rates have been on the rise. This disparity underscores the unpredictability of mortgage rates.
So, the best advice for your situation is this: don't attempt to control what is beyond your control. This includes trying to time the market or making assumptions about future mortgage rate trends. As CBS News aptly points out:
"If you're in the market for a new home, experts typically recommend focusing your search on the right home purchase — not the interest rate environment."
Instead, concentrate on building a team of knowledgeable professionals, including a reliable lender and a real estate agent, who can inform you about market conditions and how they affect your plans. Whether you're relocating due to a job change, seeking proximity to family, or experiencing other significant life changes, the right team can help you achieve your goals, even in the current climate.
So, the bottom line is this: don't attempt to control the uncontrollable, especially when it comes to mortgage rates. Even the experts can't guarantee their future trajectory. Instead, prioritize building a team of trusted professionals who can guide you. When you're ready to begin the process, reach out to a local real estate agent for support.