The real estate market has seen quite a few twists and turns over the past few years, particularly with mortgage interest rates. The record-low rates of 2021 created a golden opportunity for buyers, but the landscape has shifted dramatically since then.
The Shift in Mortgage Rates
In 2021, mortgage rates were at historic lows, creating an ideal scenario for homebuyers and driving a surge in home purchases. As of now, 24% of homeowners are holding mortgages with rates of 5% or higher. Just two years ago, about 90% of mortgages were secured with rates below 5% so things are changing. For buyers who have been holding off, hoping for a return to those ultra-low rates, it's important to recognize the new normal and the potential cost of waiting.
Building Equity in the New Market
For prospective buyers who are hesitant to dive into the market, one critical point to consider is the opportunity to build equity. By delaying a purchase, you may be missing out on the benefits of homeownership, including the potential for long-term equity growth. Even with higher mortgage rates, buying a home today means investing in your future and starting to build equity that can pay off down the line.
The Psychology Behind Today's Rates
An interesting trend in the current mortgage market is the increase in loans just below the 7% mark. Apparently, there has been a notable rise of new loans, and some mortgage analysts suggest this could be attributed to borrower psychology. The appeal of seeing a "6" in front of the mortgage rate seems to offer a psychological comfort for many homeowners, making the higher rates seem more attainable compared to crossing the 7% threshold.
There’s no disputing that the mortgage rate landscape has changed significantly in the last 18 months but buyers are adaptable and it’s important to remember that you should buy a home when it aligns with your personal and financial goals, not just when interest rates are low. None of us have a crystal ball so trying to guess the next move in the market may prevent you from getting into the market!
Source: MPAMAG.com | Treehouse Mortgage