Mortgage Rates Rising could change your plans as a home buyer in Metro Detroit. Find out how to create a new plan and buy now.
In the last few weeks, the average 30-year fixed mortgage rate from Freddie Mac inched up to 5.75% conventional for 20% and 5% down, and FHA rates are at 5.50% with 3.5% down as of today, May 9th. While that news may have you questioning the timing of your home search, the truth is, timing has never been more important. Even though you may be tempted to put your plans on hold in hopes that rates will fall, waiting will only cost you more. Mortgage rates are forecast to continue rising in the year ahead.
Mortgage Rates Since the Last Housing Boom
It helps to understand the mortgage rates trends and dipping into the 3.5% and below range wasn’t normal. The Feds propped up the 10-year Treasury Yield to help stabilize the job market and the economy due to the pandemic. Due to Supply and Demand prices kept rising. In 2021 the home-buying frenzy occurred driving up prices even more.
The Housing Bubble
As you can see by the graph below how the last housing bubble started in 2000 and mortgage rates were at a whopping 8.62%. The only way to protect the housing market and future equity growth was to get a handle on Supply and Demand and home prices. You buy a house vs renting to build your future wealth via your home equity. Yes, it’s a bummer you could capitalize on the low rates, and on the other hand, how would you feel if the value of the home plummetted and you were paying for a house with negative equity. In order for the economy not to slip from inflation to recession, changes needed to occur quickly. The job market changes in 2005 started the chain reaction of the Great Recession and the Crash in the housing Market NOT mortgage Rates. Another way to look at it is how would you feel if we kept going with the low rates, inflation moved to recession and you lost your job and couldn’t pay for your mortgage. I was there the first time, this was the right move. I just prepared a detailed blog post Are We in a Housing Bubble Ready to Pop?
10-year Treasury Yield affects the Mortgage Rates NOT the Federal Reserve Interest Rates.
To prop up the economy during the pandemic the Feds offered investors a great incentive to buy 10-year Treasury Bonds. The yield went to record lows and mortgage rates followed. So now we have to add another layer to this hot mess and the cause of the huge increase in the 10-year Treasury is the war in Ukraine setting off crude prices to rise and adding to the inflation problem we already had. The great news is all can be fixed in time. What we need to do at this point is protect our steady growth in the housing market, keep inflation in check, and the jobs market.
My Solution to Mortgage Rates Rising
One thing history has shown us from the above graphs, what goes up will come down so you can refinance to lower your mortgage rate and your monthly payment. The bad side of most mortgage rate refinances you have to pay bank fees again.
Find Out How I Can Save You Thousands in Closing Cost
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We are just in a little pump in the road for mortgage rates and you’re in shock over the huge increase. As a solution to help you over the pump, as a Keller Williams agent I can help you save thousands in closing costs with our Keller Mortgage Zero Plus 3 ways.
1. When you buy you save thousands 2. You can offer potential buyers for your home Zero Plus so they can save thousands. This is a great incentive to keep them focused on your property and not your competition. 3. When mortgage rates go down you can save thousands again and lower your monthly payment…Win ~ Win. It’s your money, we need to put it to work for you, not the lender.
How Mortgage Rates Rising Impact You
If you’re planning to buy a home, it’s critical to understand the relationship between mortgage rates and your purchasing power. Purchasing power is the amount of home you can afford to buy that’s within your financial reach. Mortgage rates directly impact the monthly payment you’ll have on the home you purchase. So, when rates rise, so does the monthly payment you’re able to lock in on your home loan. In a rising-rate environment like we’re in today, that could limit your future purchasing power.
Mortgage Rates Play a Large Role in Your Home Search
The chart (mortgage calculator) below can help you understand the general relationship between mortgage rates and a typical monthly mortgage payment within a range of loan amounts. Let’s say your budget allows for a monthly mortgage payment in the $2,100-$2,200 range. The green in the chart indicates a payment within that range, while the red is a payment that exceeds it (see chart below):
With mortgage rates on the rise, you’ve likely seen your purchasing power impacted already. Instead of delaying your plans, today’s rates should motivate you to purchase now before rates increase more. Use that motivation to energize your search and plan your next steps accordingly.
The best way to prepare is to work with a trusted real estate advisor now. My recommendation asks them questions and read what they write. Do they understand the housing market trends and how the rates can affect your bottom line? You have 2 types of agents 1. agents that provide service through education 2. or an agent that opens doors and looking to collect a check when you get an accepted offer. Which one do you want?
Your 🔑 To Home Selling and Buying Success ~ Safe eGuides
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Don’t muddle through the Home Buying and Selling Process. Buying a new home is a dream for all of us, and it’s an emotional and stressful process.
It also involves the most significant financial transaction you probably will make in your lifetime. Your Buying Guide…will walk you through tips, strategies, and how to understand the numbers to strengthen your negotiation power.
Your Selling Guide…It will help you work through the selling process using the latest in high-tech market tools, so you make MORE Money. Our goal is to separate your home from the competition, keep Buyers focused on your house. The Selling Guide is very detailed and works step-by-step, so you’re guaranteed Top Dollar for your home.
Bottom Line to Mortgage Rates Rising
Serious buyers should approach rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run. Let’s connect today so you can better understand your budget and be prepared to buy your home even before rates climb higher.
Simplifying Real Estate Through Education
As we move forward, it’s been challenging as we navigated through all the changes. Putting your dream of a new home on HOLD shouldn’t be one of them. Now more than ever, knowledge will be your power. Know the Market You’re In and your Negotiation Power. Check out Categories for additional updates regarding the Market | Buying | Selling
If You Need To Sell 1st… I Recommend 🛑Doing This!
No 2 homes are alike, and agents need to 🛑 marketing ONE size fits all. We no longer have an exposure problem (internet). Your home is buried on public home search internet sites. The only way to compete on those platforms is the price. If you want more money, you need to apply Influence. Separate your home from the competition, so the Buyer sees value. Keeping them focused on your property and not getting lost in homes’ inaccurate data on public internet sites is necessary. Having digital omnipresence on serval platforms is your key to success. Remember MORE INFLUENCE = MORE 💰. We have details on how you can utilize High Tech Marketing and Win!
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