Mortgage rates in the United States have hit a 22-year high, making it more expensive to buy a home. The average 30-year fixed-rate mortgage rate is now 7.23%, according to Freddie Mac. This is up from 7.09% last week and the highest level since June 2001. The rise in mortgage rates is being driven by a number of factors, including the Federal Reserve’s efforts to combat inflation. The Fed has raised interest rates several times this year and is expected to continue to do so in the coming months.
Mortgage rates provide headwinds for buyers and homeowners
Rising mortgage rates are making it more difficult for home buyers to afford a home. The monthly payment on a $300,000 mortgage with a 7.23% interest rate is now about $2,270. This is up from $2,160 a year ago.
The rising cost of home ownership is also being felt by homeowners. Those who are refinancing their mortgages are likely to see their monthly payments go up. In addition, homeowners who are selling their homes may need to lower their asking prices in order to attract buyers in some markets.
Tips for home buyers in a rising rate environment
- Get pre-approved for a mortgage before you start shopping for a home. This will give you an idea of how much you can afford to borrow and what your monthly payments will be.
- Be prepared to act quickly. The tight inventory of homes for sale means that appropriately priced homes that hit the market tend to garner a lot of interest quickly. It is possible that you may need to make an offer on a home as soon as you find one that you like.
- Be flexible with your budget. You may need to adjust your expectations for the size or location of the home you can afford.
- Consider a shorter-term mortgage. A shorter-term mortgage will have a higher monthly payment, but you will pay less interest over the life of the loan.
The rising mortgage rates are likely to have a cooling effect on the housing market. In fact, home sales have already begun slowing down during the first half of the year. Furthermore, this trend is expected to continue in the coming months. Of course, add in inflationary pressures being felt by all Americans and it is no surprise to see a slowdown in the housing market.
Are you thinking about buying or selling a home in the South Florida market? Now more than ever, it is important to have a trusted and knowledgeable real estate professional to guide you through this market. We can help! Contact Natasha at Live South Florida Realty, Inc. today! In addition, be sure to download the free Florida Home Search app for your smartphone or tablet.