Mortgage Interest Rates are a HOT topic right now. Almost every day, we are getting peppered with questions… How high can they go? When will they come back down? Won’t prices start to fall now?
Over the past 6-weeks or so, we have seen rates move quickly to the North. For Government backed loans (FHA/VA), February saw an average of about 3.5% and today is 4.5% or greater. That equates out to an extra $231 per month on a $400,000 loan amount.
When looking at Conventional, 3.75% was the norm in February while we touched over 5% (April 5th) and that means an almost $300 per month difference for the same $400K loan.
Historically speaking, pretty much anything under 7% is considered a good rate, although I realize the recent past with 3% (or lower) rates have set a new way of thinking. Plus, prices are higher, which makes a more dramatic impact as rates rise. Still better than the 17% rates a few decades ago…
It’s complicated… with so many factors & variables involved and none of which we can control unfortunately. Many seem to think the Fed raising their rate directly impacts mortgage rates, but they do not set each other.
Rates will continue to ebb & flow over time so it’s something to monitor for sure as we cruise into 2022’s 2nd quarter. While the rate increases are giving some buyers more pause, there has been plenty of demand overall to not allow homes to sit on the market without offers. Although, some buyers who got pre-qualified 60-days ago no longer qualify so anyone looking to buy better be in tune with their loan officer to stay on top of what the rate changes mean for their budget.
Also looking to the past… during times of rising interest rates, home prices don’t automatically spiral downward. In fact, we usually see prices rise, just not at the same pace that we are today.
Same can be true for periods of high inflation… home prices do not normally fall.
One thing is for certain, we seem to be in unprecedented times so anything is possible and weekly changes can occur with multiple economic factors right now. Some feel that we will see a little relaxation in the rates come summer time so hopefully that proves to be true for everyone in the market.
**We are NOT loan originators. Rates mentioned are for educational purposes and we encourage all of our clients to contact a licensed Mortgage Broker / Originator to discuss their own personal situation. Borrowers are subject to qualification.**