How Long Will Higher Mortgage Rates Stay?

Mortgage rates have been getting a lot of attention lately. If you’ve been following the headlines or hearing the talk around the water cooler, you may not be surprised to learn that rates have recently reached their highest level in over two decades.

That can feel like a bit of a gut punch for first time homebuyers, retirees looking for a second home and everyone in between. If you’re wondering whether or not you should delay your plans, here’s what you really need to know.

How Higher Mortgage Rates Impact You

There’s no denying mortgage rates are higher right now than they were in recent years. And, when rates are up, that affects overall home affordability. It works like this: the 

higher the rate, the more expensive it is to borrow money when you buy a home. That’s because, as rates trend up, your monthly mortgage payment for your future home loan also increases. 

Urban Institute explains how this is impacting buyers and sellers right now:

“When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes…Additionally higher interest rates mean fewer homes on the market, as existing homeowners have an incentive to hold on to their home to keep their low interest rate.”

Let’s look at this on a local level. There are more than 50 active listings in downtown St. Augustine, but only four are under contract. This means if you are a buyer, it’s time to go shopping. Even with higher interest rates, there is still opportunity and it’s unlikely you’ll find yourself in as many bidding wars compared to when interest rates are low.

Some people are putting their plans on hold solely because of mortgage rates, but what you want to know is: is that the right strategy for you?

Where Will Mortgage Rates Go from Here?

If you’re eager for mortgage rates to drop, you’re not alone. A lot of people are waiting for that to happen. But here’s the thing. No one knows when it will. Even the experts can’t say with certainty what’s going to happen next.

This leads us to one of our favorite sayings here at The Newcomer Group:

Time in the market is better than timing the market.

What exactly does that mean? Well, it means that on a day-to-day or even month-to-month level, real estate investing can be unpredictable. But, when you take a long-term view, real estate is one of the safest places you can put your money. Especially in a popular destination—St. Augustine has been a city for over 450 years—real estate is constantly appreciating. Some models show that homes purchased in St. Johns County will appreciate by 40% in the next ten years.

Forecasts project rates will fall in the months ahead, but what the latest data says is that rates have been climbing lately. Add in a Federal Reserve eager to tamp down inflation alongside worldwide instability and you can understand just how tricky mortgage rates are to project.

Don’t forget: you always have the availability to refinance your mortgage later. You can take advantage of lower house prices now and put yourself ahead of the curve when mortgage rates come down.

Bottom Line

The best advice for your move is this: don’t try to control what you can’t control. Align yourself with the right team of professionals that can help you find the right fit for your family and your budget—regardless of the mortgage rate environment.

Welcome Home to St. Augustine

If you’re thinking about becoming a homeowner or looking to make a move, let’s connect. Check out our up-to-date real estate listings or give us a call at (904) 599-5633.