How do Mortgage Rates affect today's Homebuyers?

Since January, according to a survey by Freddie Mac, the average 30-year fixed-rate mortgage has climbed by 1.45% (from 3.22% to 4.67%). Freddie Mac had previously predicted that rates would average around 3.6% this year; however, now, in the second quarter of 2022, they increased that prediction to 3.8%.

What does this mean for homebuyers?

If you've been planning on buying a new home, we recommend doing so now while interest rates are still low. Home values are likely to rise throughout the year, meaning the longer you delay, the more money you'll have to spend. The long-term benefit of increasing prices is that they will help offset the increase in mortgage rates that we're currently seeing. In fact, according to a new survey from Pulsenomics, home values are expected to rise at an average of 9% through 2022.

With those projections, a $600,000 home today could be worth $654,000 this time next year. Breaking it down further, this means your home's equity would be increasing by $4,500 a month over that period of time.

Purchasing a $600,000 home with a down payment of 20% would require a $480,000 mortgage. According to our mortgage calculator, a 30 year fixed loan at 4.67% would give you a payment of $2,481 per month without including insurance, taxes, and other fees. With this being the case, your equity gained through rising home prices could outweigh your monthly payment!

In Closing

Waiting to buy could mean an increase in overall cost. It's preferable to buy a house today rather than a year or six months from now if you are ready and in a position to do so. If you'd like to dive deeper into what route would be best for you and your family we are happy to help. You can contact us through the form below or call us directly at (512) 261-1000.