Mortgage Interest Rates Are Rising: Is Now A Good Time To Buy A Home
While the year began with low mortgage rates, they are now rising and are at their greatest level in almost two years. In the last week of December, a 30-year mortgage averaged around 3% APR and on February 20, 2022, it averaged 4.19% APR. This news may come as a shock to anyone considering purchasing a property. But, to be honest, this is not completely unexpected. Experts had predicted that rates will climb in 2022, and the prediction is finally becoming a reality. However, if mortgage rates continue to rise, it may become increasingly difficult for purchasers to enter the property market. The question is, how high will interest rates rise this year, and is it a good time to purchase a home right now?
Will Mortgage Rates Keep Rising In 2022?
On December 15, The Federal Reserve announced that American consumers can expect a series of rate hikes in 2022. According to Joel Kan, associate vice president of the economic industry at the Mortgage Bankers Association, “Another year of solid economic growth paired with the Fed’s tighter policy stance will put increasing pressure on rates,”
Though experts agree that mortgage interest rates will continue to rise they are divided on how high they will rise and how quickly they will do so. However, housing affordability is expected to tighten dramatically. Based on previous trends, it is reasonable to expect the average 30-year mortgage to hit 4.5% or higher by the end of 2022.
Is Now The Right Time To Purchase A Home?
Before entering the market, some buyers may be tempted to wait for lower interest rates or for home prices to come down. However, purchasing a home is, as always, a personal decision. It has less to do with the market and more to do with your finances.
According to Jon Meyer, a loan specialist with The Mortgage Reports “While it is always wonderful to receive a better rate and a lower total monthly payment, there is never a poor time to buy a home.” He further goes on to add that “You are gambling when you wait for the right interest rate,”
Here are some important housing trends to watch in 2022:
- With home prices continuing to rise, it is better to buy now rather than later if you can afford it.
- Home price gains are expected to continue rising or slowdown in 2022, but not reverse. As a result, waiting for cheaper housing prices is not worth it
- Mortgage rates are on the rise. But do not be turned off by this. Even if they hit 4.5%, it will be less than half of the historical norm.
In addition, if you wait for mortgage rates to fall to a certain level, you may risk missing out on the home of your dreams or being priced out of listings you could have previously afforded.
Conclusion
Although most individuals may think they are priced out of the market as interest rates and property prices rise, this is not necessarily the case. Many homes and families are eligible for a variety of loan alternatives, each with its own set of rates and terms. While a 30-year fixed-rate loan may not be right for you, an adjustable-rate mortgage may.
If you are ready to start on your home-buying journey, discuss the mortgage rates and options with a Ratebeat mortgage loan officer today!
