If you're considering buying a home, you've probably heard that mortgage rates are rising and wondered what that means for you. Since mortgage rates have risen by more than two percentage points this year, it's natural to think about how this will affect your home-buying plans.

Buyers today are reacting in one of two ways: they are either deciding to buy now before interest rates rise, or they are waiting for rates to fall. Let's look at some context to see why so many buyers are jumping off the fence and into action rather than waiting to buy.

A Look Back: How the Current Mortgage Rate Compares to Historical Data

How today's mortgage rates compare to historical data could be one factor that influences your decision to buy now. While higher than the average 30-year fixed rate in recent years, the most recent rates are still relatively low when compared to where rates have been since 1971 (see graph below):

Mark Fleming, Chief Economist at First American, explains it like this:

“. . . historical context is important. An average 30-year, fixed mortgage rate of 5.5 percent is still well below the historical average of nearly 8 percent.”

If you’re deciding whether to buy now or wait, this is an important context to have. Today’s mortgage rates still give you a window of opportunity to lock in a rate that’s comparatively lower than in decades past.

A Look Ahead: What Happens if Rates Climb Further

Buyers who are acting now are also motivated by the fact that interest rates have risen steadily this year, and they want to get ahead of any future increases.

Why? When mortgage rates rise, so does the monthly mortgage payment on the home you're buying. Basically, if you wait, it will most likely cost you more money to buy a home. Mortgage rates are expected to rise (albeit gradually) in the coming months, according to experts. Odeta Kushi, First American's Deputy Chief Economist, explains:

“. . . ongoing inflationary pressure remains likely to push mortgage rates even higher in the months to come.”

So, if you’re ready and financially able to buy now, it may make more sense to get off the fence and make your purchase sooner rather than later. As Nadia Evangelou, Senior Economist at the National Association of Realtors (NAR), says:

“With even higher interest rates on the horizon, I don’t see any reason to hold off from purchasing a home right now. If you feel financially secure, you should start looking for a home.”

At the end of the day, there is no perfect advice on when to buy a home. What you should do depends on your goals, your personality finances, and your situation. Use this information, with the help of local real estate professionals, to make an informed decision on what’s best for you. The Mortgage Reports sums it up best:

“. . . if you’re on the fence about whether to buy now or wait for a better deal, buying sooner rather than later might be wise. That said, home buying is always a personal decision. Whether you should buy in 2022 depends on your financial situation and the local housing market where you live.”

Bottom Line

For many buyers, rising mortgage rates are motivating them to act now and make a purchase before rates rise higher. To decide what move is best for you, let’s connect so you have expert advice on your side.