For more than a decade, mortgage rates have been hovering at or close to record lows. However, over the last year, they have progressively edged upward. Homeowners and potential homebuyers have been sitting on pins and needles awaiting an anticipated mortgage increase. Thanks to a powerful inflation rate caused by supply chain issues, labor shortages and other issues, the Federal Reserve has acted on its promise to increase rates. Specifically, a week ago, the average interest rate for a 30-year fixed-rate mortgage was 3.69 percent. This shot up to 3.92 percent this week.
Currently, the mortgage rate is near 4 percent. When interest rates go higher, the maximum price that buyers can afford to pay for a new home shrinks. Likewise, refinancing becomes less affordable and feasible for existing homeowners. Keep in mind that this is only the first of three rate increases that the Federal Reserve has promised for the near future.
Housing prices have skyrocketed recently as well. This is combined with high interest rates to create an unpleasant situation for those who are in the market to buy a new home. Many buyers have been waiting for the right time to enter the real estate market. Some have been hoping that home prices would ease up from their impressive escalation. In some markets, talk of a housing bubble has caused some potential buyers to hold off on buying a house. However, it is clear that the cost of a home mortgage will not be much cheaper than it is today in the near future.
Are you wondering how much house you can afford to buy given current interest rates? Our loan reps at MortgageDepot are available to help you get prequalified for your next mortgage. The process only requires a few minutes of your time, and it can help you to determine what your next move should be. Contact us today for assistance.
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