Crunching the Numbers: Are Higher Mortgage Rates the New Normal?

If you've been watching the headlines, you're probably well aware that mortgage rates have been steadily climbing, reaching levels we haven't seen in over two decades. 

It's a situation that can make even the most steadfast prospective homebuyer hesitate. So, what should you do with these higher mortgage rates?

How Higher Mortgage Rates Impact You

There's no denying that mortgage rates are currently higher than they've been in recent years. And when rates rise, it directly impacts the overall affordability of homes. Here's the key concept to grasp: the higher the rate, the more expensive it becomes to borrow money for your future home. As rates trend upward, your monthly mortgage payments also increase.

Urban Institute provides valuable insights into how this situation affects both buyers and sellers in the housing market: 

“When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes . . . Additionally, higher interest rates mean fewer homes on the market, as existing homeowners have an incentive to hold on to their home to keep their low interest rate.” 

In light of these challenges, some individuals are contemplating putting their homeownership plans on hold due to the current state of mortgage rates. But you truly need to understand whether that's the right strategy.

Where Will Mortgage Rates Go from Here?

You're not alone if you're hoping for mortgage rates to take a tumble. Many people are eagerly awaiting that decline. However, the unpredictable nature of these rates makes it a difficult endeavor. Forecasts indicate that rates might fall in the coming months, but recent data reveals a different story – rates have been steadily climbing. This discrepancy highlights the challenge of predicting mortgage rate trends.

The best advice for your real estate journey is simple: don't try to control what you can't control, such as the ever-fluctuating mortgage rates. Instead, focus on building a team of skilled professionals, which includes a trusted lender and real estate agent, who can provide you with the insights and guidance needed in this dynamic market. As CBS News aptly states, 

“If you're in the market for a new home, experts typically recommend focusing your search on the right home purchase — not the interest rate environment.” 

Bottom Line

When it comes to navigating the real estate market during times of rising mortgage rates, the best strategy is to focus on what you can control. Mortgage rates are notoriously difficult to predict. Even experts can't say for certain where they'll go from here. The key is to assemble a team of trusted professionals who can keep you informed and guide you through the process.

Ready to embark on your homebuying journey? Connect with our experienced real estate team today. We're here to provide expert advice, answer your questions, and help you Find Your Perfect Home. Don't let the ebb and flow of mortgage rates deter you from your homeownership dreams – let's work together to make them a reality.