It is worth looking at the bright side of things.
- Many home buyers today are struggling with higher mortgage rates.
- Although buying a home may be more expensive right now, that could change over time.
In the middle of 2020, mortgage rates did something amazing for borrowers: they started plunging to record lows. Borrowing rates then remained competitive throughout 2022.
But over the past seven months, mortgage rates have risen sharply. And now those looking to buy a home face a distinct challenge: having to pay more to finance a home purchase at a time when property values are skyrocketing.
If you’re trying to buy a home, you may not be happy with the mortgage rate trend at all. But shark tank Real estate personality and guru Barbara Corcoran says higher mortgage rates aren’t all bad. This is because they have the potential to drive down house prices.
A much-needed cooling of the real estate market
When it comes to borrowing money for any purpose, whether to buy a house, car or furniture, it’s natural to want to pay as little interest as possible. So if you’re looking to sign a mortgage, you might be less happy with today’s rates.
But Corcoran says that while no one likes higher interest rates, they could help cool the housing market. How? If buyers start to pull out of the market due to rising rates, this will lead to less competition. This should lead to fewer bidding wars, which are notorious for driving up house prices.
Additionally, if mortgage rates continue to rise, it could encourage sellers to list their homes before borrowing becomes truly unaffordable. And if many properties flood the market in a short time, it will lead to more competition and a narrower gap between housing supply and buyer demand. The likely outcome? Lower house prices, which can help offset higher borrowing costs.
While it may be significantly more expensive to take out a mortgage today than it was this time last year, buyers can still take steps to save money. On the one hand, those who arrive with high credit scores can enjoy a good amount of interest rate savings. Those whose scores need improving can try to improve them, whether by correcting credit report errors, paying all incoming bills on time, or eliminating unpaid credit card debt.
Borrowers should also be sure to shop around with different mortgage lenders. While rates may be higher across the board, that doesn’t mean some lenders aren’t more competitive than others.
Facing reality while keeping hope
Homebuyers today would no doubt prefer mortgage rates to mimic the levels they sat at from mid-2020 to early 2022. But at this point, buyers should expect the borrowing rates remain largely at their current level or increase further.
That’s not to say mortgage rates won’t drop here and there. But the days of signing a 30-year mortgage at 3% may be long gone. Rather than lamenting that fact, buyers can hope it leads to a much-needed cooling in the housing market – and more affordable buying opportunities in the future.
The Best Mortgage Lender in Ascent in 2022
Mortgage rates are rising – and fast. But they are still relatively low by historical standards. So if you want to take advantage of rates before they get too high, you’ll want to find a lender who can help you get the best rate possible.
This is where Better Mortgage comes in.
You can get pre-approved in as little as 3 minutes, without a credit check, and lock in your rate at any time. Another plus? They do not charge origination or lender fees (which can reach 2% of the loan amount for some lenders).
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