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New homebuyers

Posted on Monday, March 28, 2022 in Mortgage Lending

Why Higher Mortgage Rates Won't Stop Most People from Buying a Home

Mortgage rates are starting to edge up from their all-time low recorded during the COVID pandemic. According to Freddie Mac, the 30-year fixed-rate in January 2021 had fallen to an astounding 2.65%.

But if you take a historical view of 30-year mortgage rates, today’s rates are not even close to the all-time high in October 1981, when rates hit 18.63%.

That’s why most people interested in buying a home aren’t letting the recent modest rate increase interfere with their plans to buy a home. They understand that a 15-year fixed rate of 3.50%* or 30-year fixed rate of 4.25%* is still very attractive. 

It’s also true that buying a home has historically been a good investment because real estate typically tends to increase in value over the long term. And, as a property owner, you have a marketable asset that can be sold when you’re ready to purchase a new home, wish to relocate or are ready to retire. That’s something you don’t have when you’re a renter.

Low mortgage rates do benefit homebuyers by allowing them to borrow more money at less cost in the long-term, but mortgage interest is rarely the most important factor when someone is considering whether to buy a home. For most buyers, the immediate concern is how much they’re going to have to pay in any given month.

If you’re in the market for a new home during a period of increasing rates, consider looking for a property that has a slightly lower asking price; and speaking with a qualified mortgage lender at First National Bank about prequalification and determining estimated monthly mortgage payment amounts that are a good fit for your budget.  

*First National Bank Weekly Purchase Mortgage Rates, March 21, 2022.

  1. first-time homebuyer
  2. home buying
  3. mortgage loan
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