With inflation now at 9.1% and the fed’s fund rate expected to rise again, it’s easy to assume that we are headed to mortgage interest rates that continue to climb as well. Experts project that in the near term, rates will likely settle somewhere between 5.75-6.00% for a fixed 30-year conventional loan. For many that remember that we began 2022 at a rate of 3.22% for that same loan, it seems daunting to consider 6% a reasonable rate. However, many expert economists state that mortgage interest rates in the 7-8% are a healthy rate and remind us all that the 2-3% rates were not sustainable due to the fed’s action to keep rates low, especially during the pandemic.
If you are renting, you may be reluctant to pursue buying a home because of the interest rates but keep in mind that if you think mortgage interest rates are high, you need to compare that against rental rates. Realtor® just released information stating that across the top 50 metro areas, the median rent reached $1,842, which is 15.5% higher than at this time last year. This is a new rent rate record for the 15th month in a row! While your landlord enjoys annual interest rate tax deductions, you don’t as a renter.
If you have a home to sell, you may be concerned that to buy a home you will have to give up your current interest rate which is likely lower than today’s rates, but remember that like in years past when interest rates were higher than we liked, we had options to “buy” down our interest rate either on our own or some sellers may not offer this incentive, or you could refinance in the future when interest rates came back down.
Not sure if this is the right time to buy or sell a home? Let’s set up a private consultation to evaluate your goals and expectations to see if they align with today’s market. You’ll be glad you didn’t wait to learn more.