While interest rates have indeed gone up, historically, they’re still low. The lower rates we’ve gotten accustomed to in the last few years have been abnormally low due to Covid’s effect on the economy. With life returning to a new everyday normal over the last several months, the rate increases we are currently seeing are simply the market balancing itself to where things were pre-pandemic.
Instead of focusing on the rate, buyers should figure out what they’re comfortable paying monthly for a mortgage given the current rates, then determine a budget so they can narrow their home search to what’s affordable. There are also several mortgage types to choose from, all with different terms that will affect monthly payment. And don't forget — even with the higher rate a buyer may get today, there is always the option to refinance a few years down the road when rates come down again.
A great opportunity exists for buyers right now, as higher rates are helping to slow the market and reduce competition for the handful of properties available. By working with an experienced mortgage broker and getting pre-qualified for a home they know they can afford, buyers can confidently present their best possible offer and have greater success in this changing market.
Inventory is still limited, which means home prices are remaining steady regardless of the higher interest rates. Should rates dip down the road, property values could spike again similar to what we’ve seen in the last few years. This means that purchasing a home in this market is still a great opportunity, and a sound investment for the future.
Watch the video below where I talk in greater detail with James Chen, Loan Officer with Citizens Bank, about how to navigate this shifting real estate market despite the rising rates. If you have additional questions, don’t hesitate to get in touch with me at 917.720.7584