MORTGAGE RATES ARE RISING
The historically low mortgage rates we have seen during the COVID era are starting to rise. Economic stimulus programs were put in place in late spring of 2020 to prop up the economy, but as it has since recovered, these programs are likely soon being tapered off. More people are back to work, the job market has improved, and so inflation is likely soon going to happen as well as the Fed may soon be lowering their purchasing, and the artificial reduction in rates will cease.
Rates are now up to over 3% and will be for the rest of the year, but that is still very low in terms of mortgage rates. Once again FHA and the jumbo loan limit will increase in January 2022, as they did earlier this year. When this happens, more people can borrow for higher amounts, and this is appropriate given how average prices have increased significantly over the past 18 months, with supply lower than ever and demand higher than ever.
With a .5% rate increase, a buyer loses about $20,000 in buying power. And as prices climb- maybe not at the rate they’ve been increasing, but still they’ll climb- homes and loans will cost more to secure.
Where rates currently are, and with the slight lull in buyer activity, this marks the best time to buy for those still currently looking to purchase a home. A lot of the buyers we saw competing up until this point have either found homes, decided to wait it out and have renewed their leases, or have burned out and just decided to wait. In fact, mortgage applications are down 12% year over year, so with fewer people getting pre-approved there will be fewer people competing for homes, for now. Those who are waiting to see if prices drop will regret that decision- spring brings about droves of newly motivated buyers who will then compete, outbid one another, and drive prices up.
For the first time in almost five decades, the average 30-year mortgage rate fell below 3% this week, even amidst concern regarding the resurgence of