As of January 13, 2022, mortgage rates have hit their highest point since the start of the pandemic; averaging 3.45% for a 30-year fixed-rate mortgage (“FRM”). Many analysts expect this trend to continue. While it is important to note that rates haven’t increased by a full percentage point over the last year, 0.8% interest on a $750,000 home comes out to an additional $260 per month (assuming 20% down on a 30-year FRM).
As owning a home becomes prohibitively expensive, it is possible that housing prices will decrease to become affordable again. However, most analysts believe this will simply slow the price growth of homes, rather than stop it entirely. While this is unpleasant news, the housing market’s rapid inflation was never expected to last forever.
Mortgage rates are loosely tied to inflation rates, which hit 7% in December 2021 (this is the fastest rise since 1982). Thus, many people are anxiously watching inflation rates as a proxy for whether mortgage rates will go up as well. All-in-all, mortgage rates will increase, price growth on homes will slow, but value will increase so long as there is a shortage of homes relative to potential buyers.
At the Chernov Team we understand that knowledge is power, and knowledge of market conditions is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.
Mortgage Rates on the Rise: Expect a Slow Down in Home Appreciation
