Prices stabilized this week, hovering above 5%, according to Freddie Mac. This was the first time since the beginning of March that the average weekly rate did not rise. However, that doesn’t necessarily mean they’re done with a hike.
“I think rates above 5% will become the norm, and I don’t see a significant downward movement in the near future,” says Ralph Debognara, president of Home Qualified and vice president of Cardinal Financial.
Even though the prices are high, that doesn’t necessarily mean it’s a bad time to buy a home. Depending on where you live, buying a home may be better than renting.
“I still think we’re in a good buy-or-hold market,” Debognara says. “Higher rates mean less purchasing power in some cases, but rent is rising faster or faster than home prices due to inflation, making buying the most ideal option for many.”
Today’s Mortgage Rates
Today’s Mortgage Refinance Rates
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.
Estimated monthly payment
- pay 25% It will give you a higher down payment $8,916.08 on interest charges
- Reduce the interest rate by 1% will save you $51.562.03
- Pay extra 500 dollars Each month would reduce the term of the loan by 146 months
By plugging in different time periods and different interest rates, you’ll see how your monthly payment can change.
Are Mortgage Rates Rising?
Mortgage rates started rising from historical lows in the second half of 2021, and are likely to continue rising throughout 2022.
In the past 12 months, the CPI rose 8.5%, the fastest inflation rate since 1981
It has been working to control inflation, and plans to raise the target rate for the federal funds six more times this year, after a 0.25% increase at the March meeting.
Although not directly related to the federal funds rate, mortgage rates are often raised as a result of higher Fed rates. As the central bank continues to tighten monetary policy to bring down inflation, mortgage rates are likely to remain high.
What do high rates mean for the housing market?
When mortgage rates rise, the purchasing power of home shoppers declines, as a greater portion of the projected housing budget must go to paying interest. If prices rise enough, buyers can exit the market altogether, which cools demand and puts downward pressure on home price growth.
There is such a shortage that even if 50% of people stop searching today, you will still be in high demand.Ralph Debognara, President of Home Qualified and Senior Vice President of Cardinal Financial
However, this does not mean that house prices will fall – in fact, they are expected to rise further this year, at a slower pace than we have seen in the past two years.
Dibognara says that although higher prices are slowing demand, lower inventory will continue to drive prices higher.
“There is such a shortage that even if 50% of people stopped looking today, the demand would still be high,” he says. “So I think because of that demand, you’re going to see prices go up for at least another 18 to 24 months.”
What is a good mortgage rate?
It can be hard to know if a lender is offering you a good rate, which is why getting pre-approved with multiple parties is important.
And compare each offer. Apply for pre-approval with at least two or three lenders.
Your rate is not the only thing that matters. Be sure to compare both the monthly costs and the initial costs, including any lender fees.
Although mortgage rates are heavily influenced by economic factors beyond your control, there are a few things you can do to help ensure that you get a good rate:
- Consider fixed rates versus adjustable rates. You may be able to get a lower introductory rate with an adjustable mortgage, which can be good if you plan to move before the introductory period ends. But a fixed price may be better if you’re buying a forever home because you won’t risk the price going up later. Look at the rates offered by your lender and weigh your options.
- Look at your money. The stronger your financial position, the lower your mortgage rate. Find ways to increase your credit score or lower your debt-to-income ratio, if necessary. Saving for a higher down payment also helps.
- Choose the right lender. Each lender charges different mortgage rates. Choosing the right option for your financial situation will help you get a good price.