Mortgage rates have continue to climb for 4 straight weeks and are at the highest they have been in over 4 years!
The Federal Reserve chose not to hike the prime rate this week but indicated it’s likely that we will see at least three rate hikes this year. The Fed doesn’t set mortgage rates but its decisions do influence them. While mortgage rates are still historically low, they were slightly lower after the 2007 / 2008 financial crisis. That not only helped jump start the increase in home prices, but it also gave borrowers a new sense of “normal”, especially with the younger millennial homebuyer who has never experienced the 15-percent+ interest rates back in the 1980’s. Higher home prices and higher rates both will impact affordability this spring.
The housing market is already facing a supply crisis, with more people wanting to buy homes than there are homes for sale. Higher mortgage rates will make current homeowners think twice about buying the next home because most homeowners likely refinanced over the past few years and have rates in the 3-percent range making it difficult to accept a higher rate in order to downsize or upsize to a new home. When homebuyers don’t move that reduces the number of home for sale which then drives up home prices with each house having multiple offers.
For first-time buyers, even a quarter percent difference in mortgage rates could price them out of the home they want to buy. Today’s buyers are saving less, with more student debt and higher rental rates. Wages may be on the rise, but not as fast as the almost 7-percent average annual home price increase.
If you are looking for your first home, your final home, a nice weekend get-away second home or even rental properties to enhance your financial portfolio, NOW is the time to act1 Contact me today to begin the pre-approval process and get the ball rolling before the payment is priced out of your budget.
The views expressed are my own and do not necessarily reflect the views of my employer.
Visit my website at: www.juliecnichols.com or contact me with any of your home loan questions.
[tags Mortgage, Real Estate]
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