Tips For Buying a Home While Rates are Rising, Pt. 2

It’s no secret that mortgage rates have been increasing and affecting those looking to purchase a home. As your local community bank, our goal is to guide you through the home financing process with knowledge and expertise. In this article, we’ll look at the reasons why rates are on the up-tick and lend you knowledge to support your home buying decisions in this unique time.

Rates are on the rise

Why is this happening? Beginning in March 2022, the Federal Reserve has made a few interest rate hikes to counter inflation. So, this is a good time to focus on savings, whether that means starting an emergency fund or adding to your existing savings balance. Compare savings accounts from First Columbia.

Rising Mortgage Rates 3

Is house price or interest rate more important?

In an ideal world, you would wait to buy until both interest rates and home prices are low. However, sometimes you need to move now, regardless of the state of the market. In that case, your home buying decisions will be governed more by interest rates, which are relatively fixed. Home prices, in some cases, can be negotiated and you can always choose a less expensive house.

If interest rates fall in the future, you can always refinance your mortgage. Until then, you want to set yourself up to afford the home you buy now.

Is now a good time to buy a home?

While mortgage interest rates are higher than they were a few years ago, they are still historically very low. Between 1971 and 2020, the average rate on a 30-year-mortgage was close to 8%. It may seem counterintuitive, but higher interest rates in general are associated with periods of economic growth, lower unemployment, and wage growth. So, it may cost you a bit more to buy a home now than it would have in 2021, but it’s still a good time to buy.

Is it better to buy a home when interest rates are high?

As a silver lining, the increase in rates will likely cause a drop in home costs as the market cools off. The housing market has been incredibly competitive for the past few years due to low inventory and other factors, so rising rates could actually be a boon for homebuyers who have wanted to avoid overpaying for a house. The current market environment should eventually make it easier for first-time buyers who couldn’t afford peak home prices.

Connect with our local lenders for insight into your local real estate market!

Work with the area’s leading mortgage lender on your next home purchase. We will help you get the best home loan rates available as we follow the latest market trends in Columbia County, Montour County, and Northumberland County, PA. Contact us to apply for a home loan today!

For 5 Tips For Buying A Home While Rates Are Rising, read Part 1 here.

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