Should You Wait Until Mortgage Rates Fall to Buy a Home?
No, and here’s why.
In the last 12 months, the average Consumer Price Index rose by 8.2% (September 2022 data). The Federal Reserve has been working to get inflation under control and plans to increase the federal funds target rate two more times this year.
Although not directly tied to the federal funds rate, mortgage rates are sometimes pushed up because of federal rate hikes and investor expectations of how those hikes will impact the economy.
When mortgage rates go up, home shoppers’ buying power decreases, as more of their housing budget has to go toward paying interest. If rates get high enough, buyers can get priced out of the market.
But that doesn’t mean home prices will fall. Even with fewer buyers in the market, those who can still afford to buy are competing over historically low housing inventory. Anytime there are more buyers than houses available, home prices will go up.
If you’re serious about getting a new home and can afford it, then now may be a good time to buy before interest rates go up again (as the Fed has indicated) and before you’re priced out of the market or have to settle for a home that doesn’t exactly live up to your expectations.
Speak with a First National Bank mortgage lender about current mortgage rates, loan options, and the best terms available for your financial situation.
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