Current Interest Rates: What Homebuyers Need to Know
Interest rates have been on the rise in recent months, and this is having a significant impact on the housing market. For homebuyers, this means that it is now more expensive to borrow money, which can make it more difficult to afford a home. However, there are still ways to buy a home even with rising interest rates.
In this blog post, we will discuss the interest rate environment in 2023 and what it means for homebuyers. We will also provide some tips on how to buy a home even with rising interest rates.
Current Interest Rate Environment
The Federal Reserve has been raising interest rates in an effort to combat inflation. As a result, mortgage rates have been rising as well. Earlier this year the average 30-year fixed mortgage rate was 5.51%, up from 3.22% a year ago. As of July 2023, the average is around 7%.
Impact on Homebuyers
Rising interest rates mean that it is now more expensive to borrow money to buy a home. This can make it more difficult to afford a home, especially for first-time homebuyers or those with lower incomes.
For example, if you borrow $300,000 at a 5.51% interest rate, your monthly mortgage payment will be about $1,668. This is up from about $1,300 a month a year ago.
Tips for Buying a Home with Rising Interest Rates
There are still ways to buy a home even with rising interest rates. Here are a few tips:
- Save for a down payment. The larger your down payment, the lower your monthly mortgage payment will be.
- Shop around for a mortgage. Compare interest rates from different lenders to find the best deal. We work with great local lenders who can discuss programs and current rates with you.
- Consider a shorter-term mortgage. A shorter-term mortgage will have a higher monthly payment, but you will pay less interest over the life of the loan. Adjustable rate mortgages are also an option to explore.
- Look for a less expensive home. If you can’t afford a home at the current interest rates, consider buying a less expensive home. Although not ideal, if you must relocate, this is often the best route to take.
Rising interest rates are making it more difficult to buy a home, but there are still ways to make it happen. By following the tips above, you can increase your chances of success even with rising interest rates.
If you are thinking about buying a home, contact us today. We can help you find the right home for your budget and needs and put together a plan for success.