Mortgage Rates are Dropping…Is This a Good Thing?
Mortgage rates were in the two percent range while President Trump sat in the Oval Office. Since Biden took the reins, the rates have been skyrocketing.
Buying a home has been an expensive undertaking in the past few years. Not only have home prices risen in many metropolitan cities but the rates themselves have been high.
In 2020, rates were at about 2.5% for a 30-year fixed mortgage. Now, the rates are closer to 7.1%. Depending on the cost of the home, that can add hundreds if not thousands to the monthly mortgage payment – a cost that many American families simply cannot afford.
There’s good news on the horizon, though.
In April, the rates were around 6.5%, and they showed signs of dropping. Then, they began rushing toward 8% and beyond.
Things are improving, though — and the Federal Reserve has decided not to raise the rates again.
Combine this with the fact that home prices are starting to drop, and home ownership is suddenly a possibility for many.
There’s still one problem. While it’s slowly becoming more affordable to buy, the inventory of homes is extremely low. People simply aren’t putting their homes on the market – and part of that is because it’s becoming a buyer’s market again instead of a seller’s market.
Jessica Lautz, the deputy chief economist for the National Association of REALTORS, has explained, “With elevated mortgage interest rates and the rise in home prices, buyers are facing the most challenging affordability conditions.”
If you talk with your local real estate agent, they’ll likely tell you now is the time to buy. Fall in love with the home, not the rate. You can always refinance when the rates get lower, but home prices are likely only to go up over the next few years.