Interest Rates Are Rising, Is It Still a Good Time to Buy a Home?

Question: Interest rates are going up now. Are we too late to think about buying a new home now that interest rates aren’t as low as they were? Or should we still buy now before they move interest rates up more?

It’s definitely not too late to consider buying. Historically speaking, mortgage rates are getting back to where they have been hovering for the majority of the last 20 years. Since 2000, the average 30 year rate has been in the 5-7% range. We saw some dips around 2013 and 2014 and obviously the historic lows in 2020 and 2021, but for the most part, these rates have been about where they are currently. They just seem very high compared to what we have all seen over the last two years. While a 3.0% rate certainly affords you more buying power than 6% rate, we still are not seeing devastatingly high rates. In other words, rates are still attractive, just not as attractive.

The million dollar question, then, is how high will they go? Nobody really knows the answer to this. If inflation is not held in check, unfortunately, mortgage rates will continue to go higher. If economic policies are put in place to help curb inflation, we will see them flatten out and eventually settle back down.

Now is probably a better time to consider buying than it was even several months ago. Due to rates increasing, the number of potential buyers has slacked off some. This means that sellers shouldn’t expect to get well over asking price for their homes like the market has seen over the last 12 months. Buyers will be able to get good deals on homes while still borrowing at reasonable rates.

If you are considering buying, be sure to get preapproved for a loan before beginning to look. Real estate agents like to know that they are working with buyers who will be able to secure a loan. This pre-approval process normally doesn’t take much time at all, typically just a few minutes. Do your due diligence and you’ll be house hunting in no time!