Last week, the average 30-year fixed mortgage rate from Freddie Mac jumped from 3.22% to 3.45%. That is the highest point it has been in almost two years. If you are thinking about buying a home, this news may have come as a bit of a shock. But the truth is, it was not entirely unexpected. Experts have been calling for rates to rise in their 2022 projections, and the forecast is now becoming a reality. Here’s a look at the projections from Freddie Mac for this year:
- Q1 2022: 3.4%
- Q2 2022: 3.5%
- Q3 2022: 3.6%
- Q4 2022: 3.7%
As the numbers show, this jump in rates is in line with the expectations from Freddie Mac. And what these projections show is that mortgage rates are projected to continue climbing throughout the year.
What Does that Mean for Homebuyers in Grays Harbor?
As rates increase even modestly, they impact your monthly mortgage payment and overall affordability. If you are looking to buy a home, rising mortgage rates should be an incentive to act sooner rather than later.
The good news is, even though rates are climbing, they are still worth taking advantage of. Historical data shows that today’s rate, even at 3.63%, is still well below the average for each of the last five decades (see chart below):
Despite comparisons to last year’s historically low rates you still have a wonderful opportunity to buy your new home in Grays Harbor with a rate that’s better than what previous generations may have paid in decades past. Consider, if you buy a home while rates are in the mid-threes, your monthly mortgage payment will be locked in at that rate for the life of your loan. As you can see from the chart above, a lot can change in just a few years. Buying now is a great way to protect yourself from rising costs and future rate increases while also securing your payment amount for the long term.
Existing Homeowners Considering Refinancing
Do not immediately assume that the rising mortgage rates negate the benefits of refinancing. It is not necessarily true.
At the current rates of 3.63% It is still considerably lower than the 4% many of us are paying. Experts tell you if you can negotiate a new mortgage rate that is around 0.75% lower than your current rate, refinancing should be considered as a desirable option.
“If you are a homeowner that is contemplating refinancing but are taking a 'wait and see attitude' you may want to reconsider. Most experts are convinced that mortgage rates are going to continue in an upward trajectory over the long term. Certainly, it is worth meeting with your lender, or even a few lenders, to see if refinancing works for you.”
Robles is correct. Negotiating the terms and the rate of your mortgage could go a long way towards lowering your monthly payments and the amount of interest paid over the term of the loan.
Recommendations for New Homebuyers
Those who are looking to purchase a home can also follow some recommendations that will place them in the best position to pursue their goal. We cannot stress the importance of saving for a down payment. The value of homes continues to climb. A larger down payment may help to keep your monthly mortgage affordable and within your budget. At least 10% is recommended but 20% would be wise.
Also, although there is a temptation to do so, most experts, advise against timing the market, in the hope prices will drop. In past years, this approach is a strategy that may have produced rewards for some. However, experts are predicting home prices will continue to rise over the long-term dashing any hopes prices are going to drop in the near future.
Rather than timing the market you should work to position yourself to buy when the time is right for your unique situation. Below are three considerations that help prepare you for achieving your goal:
- Know how much house you can realistically afford and search within those parameters
- Do not rush into a home purchase before you are properly positioned to afford it.
- Create a Homebuying Plan that fits your budget and needs.
- Buying a home can become overwhelming. Find a broker who you have confidence in and can trust.
Mortgage rates are increasing, and they are forecast to be even higher by the end of 2022. If you are planning to buy or refinance this year, acting soon may be your most affordable option. Contact Grays Harbors Oly Pen Real Estate to start your search today! We are here to serve you.
Oly Pen Real Estate has a team of trusted real estate professionals to help you navigate changes in our industry. We have a watchful eye on Grays Harbor market so give your Oly Pen Real Estate Team a call today at 360.249.8187 or stop by our office 141 S. Main Street in friendly Montesano, WA and discuss your expectations today!