What You Need to Know About Mortgage Interest Rates
Thinking about pursuing the path to homeownership? With home prices steadily climbing, there’s a definite cost to waiting. However, it’s also important to be aware that interest rates are rising too–and there may be several more rate hikes in the near future. As you’ve more than likely noticed, prices of everyday goods such as gasoline and groceries are on the upswing. In response to the highest rate of inflation we’ve seen since the 1980s, the Federal Reserve is ordering rate hikes in an effort to cool demand. As a result, it’s getting more expensive to borrow money. Interested in learning more about how this may affect you? Here, I share insight on what you need to know about the market for mortgages and what you can do to potentially save:
Why Are Rates Increasing?
Buyers have benefited from historically low interest rates for the past few years. However, persistent inflation has caused the central bank to raise interest rates to slow spending. Federal Reserve Chair Jerome Powell has signaled that the Fed may consider additional half-point rate increases during meetings this summer.
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Mortgage rates have already jumped significantly, and are currently the highest they’ve been in 13 years. With rate increases expected to continue coming down the pike, future buyers may be concerned about proceeding with the homebuying process. If you’re ready to move forward but would like the lowest rate possible, now is a great time to consider an adjustable-rate mortgage (ARM). When you opt for an ARM, the introductory period offers a lower-than-average rate. This period typically lasts three to ten years, after which the rate can fluctuate up or down. If rates begin to fall again once inflation is curbed, you can choose to refinance if you’re not happy with the adjustable-rate structure.
Although inflation is causing the Federal Reserve to increase interest rates, you may prefer to forge ahead with your plans to purchase a home. Homes are expected to continue appreciating rapidly, so buying now even amid higher rates may save you thousands in the long run. If you have any questions regarding your mortgage options, I’d love to help. You can reach me via email at michaela@michaelaphillips.com or by phone at 303-579-5517.