In the middle of February, mortgage rates hit their highest point in years. On February 15th, 2022, rates surged, reaching 4.2%. While new homebuyers may be alarmed by this trend, experts say not to worry. While rates are expected to continue to rise, there are still many benefits to buying a home in today’s market. Below, we’ve discussed the matter in detail.
Impact of Rising Interest Rates on New Homebuyers
Mortgage interest rates are steadily creeping upward. While this means a lot of things for new homebuyers, not all of them are bad. Here’s how buyers will be impacted by climbing rates.
Decrease in Competition
Last spring, there were bidding wars all across the country. This created a stressful situation for first-time buyers. However, competition is expected to decline this year because of rising interest rates. The market will experience a slight pullback and, though buyers will be looking at slightly higher rates, the competition won’t be quite as fierce.
Less Risk for Buyers
The decrease in competition could help new homebuyers with dodging riskier tactics like appraisal contingencies and waived inspections. Last year, many buyers were waiving contingencies in order to make offers look more appealing to sellers.
In many cases, this tactic worked and buyers who waived contingencies were able to outbid other offers. On the flip side, it also meant that buyers were pressured into doing things that weren’t necessarily for their benefit.
Waiving an inspection may make your offer look more appealing, but it also means that you have no idea what you’re getting into. You could end up purchasing a home with major issues or costly repairs.
Now, because of the decrease in competition, buyers are no longer being forced to resort to these risky tactics.
Rates are Still Favorable
What buyers should take note of is that rates are still historically low. While they’re steadily rising, they’re still relatively agreeable. So even though they’re not the same ultra-low rates we saw last year, they’re still not as high as the rates we saw in the 80s and 90s. For buyers with good credit and ample savings for a down payment, it may still be a good time to buy.
Work with Mortgage Solutions Financial
If you are a new homebuyer who has questions about mortgage interest rates or the buying process in general, we would love to help. Call our office today to get in touch and speak to an expert.
