The current 6.7 – 7% mortgage rates are here to stay, at least for the next few months, and while this is a significant difference from the three percent rates buyers enjoyed a few years ago, it’s not much different than the rates many homeowners relished back in the mid-2000s. At that time, mortgage rates came down because of the subprime mortgage crisis, and within 10 years, dropped from 8% down to approximately 5.5%. Mortgage rates remain steady right now to help control inflation and prevent housing prices from soaring. However, while many in the real estate industry favor lower rates, a rapid decline could drive real estate prices higher.
The point is, do not expect mortgage rates to decline soon, especially down to 2021 levels. Buyers looking to purchase a home should speak with a lender about their borrowing potential and a Realtor about how much house they can afford. While a home today may not check every box in the “wanted” category, there’s a great possibility that a home is available that checks a majority of the boxes, especially the important ones.
Should Buyers Wait for Mortgage Rates to Go Down?
No. Do not wait to get into the real estate market and purchase a home. When interest rates go down, which will happen, more buyers will enter the market, adding to the competition wanting a new home. Additionally, it’s better to start building equity now than to continue paying rent. Owning a home offers tax benefits and is a valuable financial asset, whereas paying rent over several years does not provide financial benefits. Some buyers may need to purchase a smaller home than desired now, but the long-term financial benefits lay the groundwork for a larger or more custom home in the future.
Inventory across central Indiana remains steady, with slightly more inventory than buyers, but not an overwhelming amount, and most homes are staying on the market for approximately a month. This balance is important because it shows bidding wars among potential buyers are not as frequent as they were a few years ago; therefore, first-time buyers have a good chance of purchasing a home, and buyers looking to sell a house first and then move are not having to wait long to go from one property to another.
Home Buying Strategy in Today’s Market
Shop around for a reputable mortgage broker and lender. Finding the lowest rates and fees is important when securing a mortgage. For buyers considering entering the market for the first time, consider looking at condos as well as single-family homes. Condos offer the benefits of ownership without the hassle of yard maintenance and other common homeowner expenses.