High housing prices have left many First-Time Home Buyers in a pinch. Prices have gone up for homes nationwide due to a shortage of inventory of available homes for sale. Now, mortgage rates are on the rise, creating an even more stressful situation for new homebuyers. With the average rate hovering above 5% many prospective buyers are anxious to know if rates are expected to drop anytime soon. Here’s what you need to know.
Why Are Mortgage Rates Going Up?
At the beginning of June, 30-year fixed mortgage rates rose to an average of 5.46%. That’s a steep increase from the 2.65% rates we saw in January of 2021.
Buyers want to know, why has this change occurred? What’s caused mortgage rates to go up so rapidly?
Well, there are two factors at play. The first is inflation. In 2021, the pandemic caused a global supply chain disruption. Experts believe that this is what caused the inflation surge we’re seeing today. Many countries are experiencing their highest rates of inflation in decades.
Then, in 2022, the Federal Reserve issued its highest rate hike in 22 years. This caused mortgage rates to soar even higher.
What Will Mortgage Rates Look Like in 2022?
Many buyers who didn’t take advantage of the previously low rates we saw in 2020 and 2021 are now feeling a serious level of remorse. Others, who have suddenly experienced a change in their housing situation (due to a new job, baby, etc.) are also wincing at today’s interest rates.
Buyers want to know, will rates drop anytime soon? Unfortunately, most likely, the answer is no. In fact, the situation could get worse before it gets better. Some experts are predicting that we may see mortgage rates as high as 5.5% to 6% by the end of the year.
When Will Rates Go Down Again?
There’s no way to know for sure when rates will drop again. Only time will tell. However, some experts are saying that it may not happen for a couple of years and that rates will begin to decline in 2024.
Advice for First-Time Homebuyers Seeking Low Rates
Our advice for first-time homebuyers who are interested in buying a home in 2022 is to find an experienced lender to work with who can guide you through the situation. A qualified lender will be able to show you all your options, including those with lower interest rates like FHA, USDA, and VA loans, and help you find the best one.
We’re Here to Help
Call our office today to speak to an expert about financing options for first-time homebuyers.
