Is There a Chance Rising Mortgage Rates Are Good News for Home Buyers?
Don't assume that rising mortgage rates are always going to make your purchase more expensive.
After repeatedly hitting record lows in 2021, mortgage rates have been steadily on the upswing in 2022. And this trend is expected to continue, as the Federal Reserve plans for additional rate increases this year.
Rising mortgage rates mean home buyers will pay more financing charges when securing loans. But the news isn't all bad for those interested in purchasing a property this year. Check out how rates are trending today on April 7, and learn what this could mean for the housing market.
|Mortgage Type||Today's Interest Rate|
|30-year fixed mortgage||4.912%|
|20-year fixed mortgage||4.545%|
|15-year fixed mortgage||4.015%|
30-year mortgage rates
The average 30-year mortgage rate today is 4.912%. This rate could soon hit 5.00%, which is well above last year when rates had dropped below 3.00% for this loan.
20-year mortgage rates
The average 20-year mortgage rate today is 4.545%. Although the 20-year rate is lower than the 30-year loan rate, monthly payments would be higher with this loan due to the shorter payoff time.
15-year mortgage rates
The average 15-year mortgage rate today is 4.015%. This loan has the most affordable rate, but it will come with high monthly payments due to the fact you have just 15 years to repay your loan in full.
The average 5/1 ARM rate is 3.920%. With rates on the upswing, taking out an adjustable-rate loan may not make sense due to the risk you face of your rate rising down the road.
Are these high rates going to mean your home is more expensive?
Higher mortgage rates undoubtedly mean that the cost of borrowing increases. But, these high rates could also reduce demand. And if demand falls, home prices could go down.
Prices skyrocketed last year as many borrowers flooded the market, looking to take advantage of affordable home loans. A shortage of homes for sale during the pandemic didn't help. But many experts believe that rising rates could cool the housing market.
If you can purchase a home at a lower price, then your mortgage costs may still be lower than if you had to pay more for the property -- even if your rate is higher. You'll want to be sure to shop around with the best mortgage lenders to make sure you get the most competitive rate possible, and you'll also want to research home prices carefully to get the best deal you can.
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