Back in 2020 the Federal Reserve lowered interest rates in order to stimulate growth during the economic uncertainty and decline during the pandemic. Low interest rates combined with stay-at-home orders caused a home-buying frenzy. This created a supply and demand issue; there were more people house shopping than there were houses available. The prices of the homes available rose as high as 20% here in the Capital Region, selling just at fast as they came available and almost half of those transactions were over-asking-price.
Now the days of the pandemic are behind us, as are the historic low mortgage rates. Do not mistake the housing market to be a bubble that’s “going to burst”, because the supply and demand issue is still with us. The prices of homes here in the Capital Region are unlikely to go down. But with rising interest rates, there are not as many players in the home buying market.
Just as the Federal Reserve lowered interest rates to boost the economy, they are now raising interest rates to try to slow the rate of record-high inflation. As of this writing, the current average 30-year fixed mortgage interest rate is 7.12%, that’s 18 basis points higher than it was 7 days ago. That is more than double what the average mortgage interest rates were in March 2022.
But you should not let rising interest rates scare you away from buying a home. These higher interest rates do not (and should not) negate the benefits of owning a home. You also gain tax advantages and the opportunity to build equity. Thanks to inflation, the interest rates aren’t dropping significantly anytime soon, and if you wait, you might price yourself out of the market. Keep in mind that if rates do go down after you have purchased your home, you always have the ability to refinance your mortgage to the lower rate.
The best advice we can give is to shop around for the best mortgage rate for you. And don’t worry about your credit, the bureaus expect you to shop around! You can be hard-checked by different mortgage lenders 45-days after your first hard inquiry without harming your credit score further. It is also vital to your home-buying process to work with the right real estate professional.
