There has been a lot of change in mortgage rates since the beginning of 2022. The home buying market is starting to feel the pressure of the doubling of interest rates combined with the high prices of homes. During the start of the pandemic, mortgage rates fell in response to the social and economic crisis at hand. These rates dipped as low as 2.6% – an all time low. The rise and fall of mortgage rates is historically common, although the likelihood that rates will fall as low as they did in 2019-2021 is not to be expected again. Now as inflation hits and the Fed tightens the supply of money, interest rates have risen almost 3 percentage points since January of 2022. See the table below for the most recent rates broken down by type of loan. 

This increase in rates is sharp when considering monthly mortgage interest is about double what it would have been if one bought a home in December 2021. However, don’t let this fully discourage you from home buying. There are options! This is where ARMs, or Adjustable Rate Mortgages, come into play. These are historically lower interest rate loans than the fixed rates, and have the ability to adjust over time. These are manageable options when your current 30-year fixed rate is too high for qualification. ARMs typically allows for about 3-7 years of lower interest payments but can then adjust to the market rate or above that of the fixed interest rates over time. Therefore, with ARMs you have to be sure to plan ahead and possibly expect larger payments in the future. 

It is also important to keep in mind that the overall average mortgage rate since 1971 is 7.7%. It has only been in the last 20 years that we have experienced rates lower than 7%. Therefore, as we are fearing a 6%, 30-year rate, just remember that this is still historically low. 

Feel free to reach out with any further questions on the above information or whenever you need a market update. I’m here to help.

Respectfully,

Dianne Click