Mortgage rates aren’t the only deciding factor when you’re ready to buy a home, but they are an
important one. While the neighborhood, your budget, and your savings all play a role, rising
mortgage rates can make a difference between putting in an offer on the house of your dreams
now or waiting buy.
Here’s what you need to know about mortgage rates as 2016 comes to a close.
Rates are Rising
At the end of November, 30 year fixed rate mortgage interest rates shot up to 4.03 percent, the
highest since July 2015. They were also up from the week before which had been 3.93 percent.
Interest rates have risen since the 2016 election as investors have planned for potential
increased inflation due to the incoming administration’s tax and infrastructure plans that call for
major tax breaks and more spending on the country’s infrastructure.
Higher Rates May Slow Down Home Sales
When interest rates go up, buying power goes down for some buyers. Homebuyers who may
have been on the edge of qualifying for a mortgage could be shut out with the difference of just
half a percentage point. Lower mortgage rates help sales and median prices both of which could
slow down or stall as rates go up. This affects both buyers and sellers.
Rates Could Continue to Rise for a While
Until investors and the market have a better understanding of where economic and housing
policy plans are headed in the future, rates could continue to creep up. At this level, some
buyers will be fine although they will pay more for their mortgage than before the election.
According to economists, the number to watch is five percent. If rates get to this point or higher,
it could have a dramatic effect on buyers – which will slow down sales.
If you’ve been in the market to buy, now is the time to lock in your loan before interest rates go
up more. Wait too long and you could cost yourself thousands of dollars in additional interest or
force yourself to buy less house.
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