How Do Savvy Buyers Handle Rising Mortgage Rates?

Freddie Mac’s average 30-year fixed mortgage rate increased to 3.1 percent last week, and analysts predict that rates will continue to rise through 2022:

“The 30-year fixed-rate mortgage was 2.9% in the third quarter of 2021. We forecast mortgage rates to increase slightly through the remainder of the year and reach 3.0%, rising to 3.5% for full-year 2022.”

Here are a few things to keep in mind if you’re considering purchasing a home, even if mortgage rates climb.

Taking A Vacation May Be Costly

Mortgage rates are an important factor to consider while looking for a property. If you’re purchasing a home, rising interest rates will raise your monthly mortgage payment, limiting how much you can afford. Even a minor increase in your monthly payment might have a big impact (see chart below):

You’ve probably already felt the impact of rising mortgage rates on your purchasing power. Instead of waiting and hoping for rates to drop, today’s rates should encourage you to buy immediately, before they rise much more.

Buyers Who Plan Ahead Of Time Are More Likely To Succeed

You may utilize your newfound drive to re-energize your search and plan your next actions accordingly, so you’ll be ready to act regardless of how mortgage rates change. Taking increasing rates into account as part of your budget is one approach to do so.

The easiest way to express it is as follows, according to Danielle Hale, Chief Economist at realtor.com:

“Smart buyers should consider calculating a monthly payment not only at today’s rates but also at rates that are a bit higher so that they won’t be derailed by a sudden upward move. . . .”

When you locate a property that suits your needs, you should also be ready to act. This entails obtaining pre-approval from a lender so that there are no delays when the time comes.

Working with a qualified real estate expert now is the best way to prepare. An agent can help you find a lender, tailor your search based on your budget, and be ready to make an offer fast when the time comes.

Bottom Line

Rising rates should be viewed as a motivator to buy sooner rather than a reason to wait for serious buyers. In the long run, waiting will cost you more. Consult with our agents today to determine your budget and how you may plan to purchase a home before interest rates rise.