Navigating Rising Mortgage Rates: Is Now the Right Time to Buy? - Hillcrest Bank

Written by Hillcrest Bank | Nov 30, 2023 8:57:45 PM

Hey there,

Let’s talk about something on everyone’s mind: the current state of mortgage rates. They’re on the higher side, no doubt about it. But does that mean the window to buy your dream home has closed? Let’s break it down.

First things first, let’s compare today’s rates with what we’ve seen in the past. According to the latest from Freddie Mac’s Primary Mortgage Market Survey (as of November 2, 2023), we’re looking at a U.S. weekly average mortgage rate of 7.76% for a 30-year fixed-rate mortgage. That’s quite the jump from where we started, and it’s been a quick ride.

Taking a trip down memory lane, Freddie Mac’s Primary Mortgage Market Survey shows us that the highest average 30-year fixed rate hit a whopping 18.53% in October of 1981. On the flip side, December of 2020 saw the lowest at 2.66%, staying at or below 3.17% until January 2022. From there, it’s been a steady climb - 5.00% by mid-April 2022, 5.81% by mid-June 2022, and 7.08% by mid-November 2022. We’ve seen some tapering since then, but rates are still heading north, now at 7.76%. Just to give you some context, the median 30-year fixed mortgage rate has been averaging 7.41% since ‘72. It’s not just the mortgage rate today by itself, but also the speed at which we got here that’s caught many off guard.

So, in the face of these climbing rates, the question is - is it still a good time to buy? My answer: It depends! (And believe it or not, that’s the same answer I’d give even when rates were below 3.00%).

Whether it’s your first home or an upgrade, the right time to buy is when you’re ready. Here are a few things to consider:

Do any recent or upcoming life events call for more or less living space? (Think marriage, growing family, kids off to college, retirement, etc.)
Is your job situation and income on solid ground? Any significant changes on the horizon in the next two years?
Are you managing your debts and saving at a pace that outpaces new debt? Any deferred debt payments (like student loans) that could throw a curveball?
Are you stashing away savings and building assets that can help fund a down payment and still leave some cushion post-purchase? Down payment options are often more flexible than you might think, and an experienced Mortgage Banker can fill you in on the details.
Most importantly, do you dream of a new home?

If the thought of a new home brings a smile to your face and your financial foundation is stable - in terms of income, job security, debt levels, and savings - it might be time to chat with an experienced Mortgage Banker about getting pre-qualified. Heck, reach out even if you’re not feeling 100% ready to buy today. A seasoned Mortgage Banker will ask the right questions to help you maximize your buying power or minimize that monthly payment, tailoring it to your best interests. Armed with this pre-qualification, you can confidently hit the market looking for that perfect home that fits within your budget. And in today’s mortgage landscape, having a Mortgage Banker in your corner can be a game-changer when it’s time to make an offer.

Picture this: after looking at many homes, you, finally, find that perfect home tailor-made for you and your family. The list price is comfortably within range, and you’re comfortable with 20% as a down payment. However, a reality check sets in after calculating monthly payments when factoring in today’s mortgage rates. The projected monthly payment is higher than you’re comfortable with. It leaves you with a conundrum - do you wait for rates to improve, do you make a low-ball offer and hope the seller accepts, or consider taking on a monthly payment that is more than you are comfortable with?

After some reflection, you can’t help but to feel that this is your home. If you wait, someone else will move in to your home. Still, you aren’t comfortable with taking on payments that stress your monthly budget.

You could decide to make an offer below list price. Will this be a successful strategy? Maybe, but it may depend on many factors including how long the property has been on the market, how much or how little housing inventory is on the market, and how urgent the seller is to unload the property. While each home being sold is unique, in general, the inventory levels remain low and most properties are still selling near list price assuming the list price is reasonable for the market.

Another strategy may prove to be affective allowing you to get the home of your dreams while keeping payments within your comfort level. What if you choose to make an offer near list price, but negotiate a seller credit to be used towards closing costs on your mortgage? From there, your trusted Mortgage Banker steps in and leverages those credits to permanently buy down or temporarily buy down the mortgage rate and monthly payment. With the help of these seller credits and the expertise of your Mortgage Banker, you can once again envision your dream home with the security of payments that you are comfortable with.

There are a multitude of options and products out there. The key? Connect with an experienced Mortgage Banker early and often to figure out what’s best for you. So, if you're ready to take the plunge and make that dream home yours, take the first steps today. I'd be honored to be your go-to advisor. Feel free to reach out with any questions, for some friendly advice, or if you're curious about getting pre-qualified.

Thank you,

Nick Shama
Mortgage Banker ǀ NMLS# 419069
PH: 208.845.0957 | CE: 970.485.2119

800 W Bannock ST ǀ Boise, ID 83702
nick.shama@hillcrestbank.com ǀ https://www.hillcrestbank.com/nicholasshama/

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