What We Know About Rising

Mortgage Rates

Though mortgage interest rates backed off slightly over the winter they have started to rise in recent weeks as the Fed appears to be rethinking its inflation fighting strategy. According to an article in Trading Economics, ‘Recently, The Fed raised the target range for the fed funds rate by 25 basis points to 4.5%-4.75% in its February 2023 meeting, dialing back the size of the increase for a second straight meeting but still pushing borrowing costs to the highest since 2007.’

This is concerning to some potential homebuyers as the combination of higher mortgage rates and higher prices have made homes less affordable, or so it may seem. So, if you’re planning to purchase a home this year, you too may be wondering if now’s the right time to buy or if you should hold off on your search until rates come back down.

According to the experts, the recent increase in rates has been driven by growing inflation. Joel Kan, Vice President and Deputy Chief Economist at the Mortgage Bankers Association (MBA), explains it like this:

The most recent weekly average“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time.”30-year fixed mortgage rate reported by Freddie Mac is 6.5%. It’s the third week in a row that rates have increased which puts them at the highest point they’ve been this year (see graph below):

Advice for Home Shoppers

If you’re thinking about pumping the brakes on your home search because rates have started to go up again, you may want to reconsider. This could be an opportunity to buy the home you’ve been searching for. According to the Mortgage Bankers Association, mortgage applications declined by 13.3% in just one week, so it appears the rise in mortgage rates is leading some potential homebuyers to pull back on their search for a new home.

So, what does that mean for you? If you stay on the course, you’ll likely face less competition among other buyers when you’re looking for a home. This is a welcome relief in a market that has so few homes for sale.

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Bottom Line 

Over the last few weeks, mortgage rates have risen. But that doesn’t mean you should delay your plans to buy a home. In fact, it could mean the opposite if you want to take advantage of less buyer competition. Lenders have money to lend and depending on your situation they have some very attractive arrangements that can help even the borderline borrower find the home of their dreams. Let’s connect today to explore the options in our local market.