Mortgage rates are on the rise and are expected to go higher still. What does that mean for you? That depends on if you are a buyer, and seller, or a homeowner wanting to refinance.
Mortgage interest rates are now averaging 4.42% (as of March 24th, 2022) for a 30-year fixed-rate mortgage. This is up from 4.16% last week and way up from the historic low around 2.75% last June.
What causes the rise? Some of this rise is due to inflation. To combat inflation, the Federal Reserve has raised a key interest rate which typically signals a rise in home mortgage interest rates. The Fed is expected to raise that key rate again at least 4 more times during this year. This means that we could see mortgage interest rates rise further as the year progresses.
As a buyer, this means that you will see higher monthly mortgage payments. Higher payments can change your debt to income ratio and could change the amount of money a bank is willing to lend to you for a home purchase. This could cause some buyers to wait to buy until rates are more favorable. It can also cause you to change your home search to a lower price range.
For a seller, this could mean that you have to wait longer with your home on the market before you find the right buyer. This can mean excess carrying costs if you have already purchased your next home. We could also see home prices start to fall after the rapid rise they have had over the last few years.
For someone refinancing their home to get a more favorable rate, it is unlikely that your new rate will be better than what you have currently. Many people refinanced when rates were still below 3%. We will still see many people refinance, as a lot of home improvement projects such as additions, and remodeling are frequently paid for with a home’s existing equity. This will just make those projects a little pricier as mortgage payments will be larger in addition to paying for any construction.
For more questions on this topic or for information about buying or selling a home in the Lake Wylie area, call us at 803-831-8588. You can view current listings and create custom searches on our website here.
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