A common question that we receive from clients is whether or not it is a good time to lock in a mortgage rate or refinance a mortgage for that matter. With the Federal Reserve indicating in December 2021 that it would be raising short-term interest rates to combat the current 40-year high inflation, we have already seen mortgage rates begin to steadily rise. With this said, it is important to remember that the current mortgage rates are still at historic lows. As of early March, mortgage rates rose to almost 4% from their 3.3% levels.
A race against time
If you are a current homeowner and are considering refinancing your home, this is likely a good time and may even be your last chance to do so for the foreseeable future. A recent Bankrate.com survey says that among homeowners who’ve had a mortgage since before the pandemic, 74% have not refinanced.
As for home buyers, this timing becomes more tricky. Unfortunately, extremely low housing inventories, skyrocketing home prices, & record-level home buyer competition is making it more difficult than ever to purchase a home. Nationally, home prices have increased 19% year-over-year as of January 2022. With this said, nearly 6.3 million households have been priced out of this housing market. With mortgage rates predicted to steadily rise for the remainder of the year, we expect to see even more households priced out of the market.
Although the Federal Reserve has predicted six more rate hikes this year, there is still a lot of uncertainty in the market. For example, the current war in Ukraine presents much uncertainty. This uncertainty typically makes investors move from stocks and into the safety of bonds, pushing down Treasury yields and mortgage rates. In addition, the ongoing threat of a new COVID-19 variant could also slow down the economy and keep mortgage rates lower. Overall, home prices are still expected to rise for the remainder of this year. As for the impact of rising mortgage rates on home prices, we typically see any impact in about 3+ months or so after a rise in rates. Should mortgage rates rise steadily throughout the year, home prices will likely stagnate.
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!