In recent weeks, mortgage rates have begun to climb after falling consistently during the winter. This is worrying to some prospective homeowners, as the combination of increased mortgage rates and higher prices has rendered homes less affordable. Thus, if you plan to buy a home this year, you may be wondering if now is the appropriate time to buy or if you should wait until rates drop.

The recent increase in interest rates has been caused by inflation. MBA (Mortgage Bankers Association) Vice President and Deputy Chief Economist Joel Kan explains:

“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time.”

Freddie Mac reports that the most recent weekly average 30-year fixed mortgage rate is 6.5%. It's the third week in a row that rates have grown, bringing them to their highest point of the year (see graph):

Advice for Home Shoppers

Some lenders are offering programs to temporarily lower mortgage rates. The most popular is the 3-2-1 buydown or 2-1 buydown. These programs can be negotiated with the seller to lower your interest rate by 2% for the first year and 1% for the second year (for the 3-2-1- Buydown). This allows a buyer greater affordability in buying a home as well as time to either grow into their mortgage payment or refinance within the next two years should mortgage rates go lower.

Bottom Line

In recent weeks, mortgage rates have increased. But you should not delay your intentions to purchase a property. In fact, if you wish to take advantage of less buyer competition, it could indicate the opposite. Let's connect today in order to investigate the local market choices.