Interest rates are on the rise. What does this mean for you?
Trouble is brewing, and mortgage rates are behind it. You see, the average 30-year fixed mortgage rate recently rose to 4.94%. Just for reference, that's the highest level we’ve seen in nearly eight years.
It's true that we've had some stock market volatility since then, and this has tempered the mortgage rate a bit.
That's because volatility in the stock market causes investors to look for other opportunities, which tends to push interest rates, including the mortgage rate, downward.
However, in the near to mid term, I believe that mortgage rates will stay at these higher levels or even rise. This situation is certainly having an effect on the real estate market. For example, mortgage applications are 16% lower than they were a year ago.
And mortgage applications to buy a home, rather than refinance, are at the lowest level in two years. In other words, it took a while, but rising mortgage rates are finally taking a toll on homebuyers.
Now, to be fair, this isn't just about the mortgage rate, it’s about the rise in home prices as well.
“
”
This isn't just about the
mortgage rate, it’s about the
rise in home prices as well.
mortgage rate, it’s about the
rise in home prices as well.
”
When you combine those two things, you get lower housing affordability. In fact, earlier this year, housing affordability reached a 10-year low and home prices and mortgage rates have only risen since.
So what does this mean for you? Well, if you're thinking of selling your home, this means that you should start the process as quickly as possible.
Demand for homes still remains high, and there's a good chance you could achieve a top price for your home and sell quickly.
On the other hand, if you're looking to buy, then the market might finally become more favorable to you, as more homes have become available than was true in the recent past.
If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.
