This has left many potential homebuyers and those looking to refinance more cautious when it comes to their decision-making. While still low by historical standards, the current rates may be high enough to cause some prospective buyers to reconsider.
The rise in mortgage rates have largely been driven by economic growth. With the stock market reaching record highs, and lower unemployment rates, the Fed has been signaling that it’s ready to start raising interest rates. Even though inflation was low for a while, it’s starting to increase again, driving the yield on 10-year Treasury notes, which mortgage rates are based on, to higher levels. This is causing mortgages to become more expensive for buyers and borrowers.
In addition to the overall rise in rates, the Mortgage Bankers Association recently reported that mortgage application volume decreased by 3 percent, indicating that there might be fewer buyers in the market. The decrease could be due to the rising rates and the amount of activity in the housing market in recent months.
This news is concerning for those who have already purchased a home but are looking to refinance. As rates go up, refinancing can become a less attractive option, with homeowners opting to stay in their current mortgage instead.
It’s also concerning for potential buyers. Those who bought a home recently may have gotten a better deal than someone who is looking to buy now. Though mortgage rates are still below where they were in 2018, buyers may be less likely to take on a loan if the rate gets much higher than what they can afford.
Of course, this doesn’t mean that buying a house isn’t still a good option. They’ll just need to be mindful of the current market conditions. It’s also worth considering what other costs are associated with a home purchase, such as closing costs and taxes, as these can add to the total cost of a home.
As of right now, mortgage rates are expected to continue to rise in the near future. For now, potential buyers and those looking to refinance should make sure they are aware of all the options available to them and the potential costs associated with their decision.
Mortgage rates have been steadily rising in recent months due to a combination of economic growth, inflation, and the amount of activity in the housing market. This has made it more expensive for buyers and borrowers, with mortgage applications decreasing as well. This is concerning for current homeowners who are looking to refinance, as well as potential buyers, as rates are expected to continue rising in the near future.
It is important for both current homeowners and potential buyers to consider the impact of rising mortgage rates when making decisions about their home financing. They need to take into account the total cost of the property, including closing costs and taxes, in addition to possible increases in interest rates. Additionally, potential buyers need to weigh the benefits of buying now against waiting to see if rates will drop in the future. By taking the time to carefully weigh their options, individuals can be sure to make the best decision for their financial situation.
This article was contributed on Jul 30, 2023