Based on the Primary Mortgage Market Survey from Freddie Mac, the average 30-year, fixed-rate mortgage has risen swiftly to 4.67% as of March 31. In fact, mortgage interest rates have seen their biggest increase since 2018. Prior to the start of this year, Freddie Mac projected mortgage rates would average 3.6% in 2022.
On top of interest rate increases, the median listing price for a home has climbed to a record $405,000, according to Realtor.com. Rising inflation, escalating geopolitical uncertainty and the Federal Reserve’s actions are driving interest rates higher and reducing consumers’ purchasing power.
So, where are rates headed, and will they continue to increase? With inflation numbers rising, mortgage rates could remain above 4% on 30-year fixed mortgages throughout the year. What does this mean if you are looking to buy a home?
The expected increase in mortgage rates and home values means it is better to buy a home sooner rather than later, if you are able. That’s because it will cost you more the longer you wait. There is a potential silver lining to purchasing a home now: Rising prices have a long-term benefit once you buy.
If you purchase a home today at $400,000, and put 10% down, you would be taking out a $360,000 mortgage. At a fixed rate of 4.42%, your mortgage payment would be $1,807 a month (principle and interest only). If home values increase in value at 9% during 2022, that $400,000 home would be valued at $436,000 by this time next year! In other words, the equity in your home would increase by $3,000 a month over the next 12 months. This is one way to put the home price appreciation to use, in a way that will benefit you.
A higher mortgage interest rate, as well as paying more for a new home, is a tough pill to swallow. However, the cost of waiting could be much worse. If you are ready, willing and able to purchase a new home, now may be better than a year from now, or even months from now. Connect with a trusted, licensed mortgage professional to begin the process today.
– Matt Quagliana, NMLS #1937747, is a licensed mortgage professional with Homeowners Financial Group in Canton. He can be reached at firstname.lastname@example.org or 770-885-6060.