“Unlock the Dream- Home Prices Sure as Rates Climb High!

After years of struggling to keep up with skyrocketing home prices, homebuyers are facing yet another challenge: mortgage rates at a new all-time high. With prices soaring and little hope of significant relief, prospective buyers are feeling locked out of the market and unable to make their dreams of homeownership a reality. According to the Consumer Financial Protection Bureau (CFPB), the average rate for a 30-year fixed-rate mortgage hit a record 4.78 percent in April 2021, up from an already elevated rate of 4.25 percent in January. This marks the highest rate since April 1990. Due to the surge in mortgage rates, many prospective buyers are finding themselves priced out of their chosen markets. The National Association of Realtors (NAR) Housing Affordability Report – which tracks the affordability of housing across the country – found that housing affordability has declined in all 50 states. Despite low inventory of available homes driving up prices, economists remain optimistic that homebuyers can still find ways to manage their budgets and afford the property they want. As Lawrence Yun, chief economist at the NAR, explains, “There is no doubt that mortgage rates being close to 5 percent is a headwind to housing. Prospective buyers need to manage their finances in a very efficient manner to afford a home, which includes shunning high-cost debt, having a strong and steady job history, and saving for a larger down payment.” In addition, real estate experts recommend that buyers consider all of the financial resources available to them. Many banks and lending institutions offer down payment assistance programs designed to help qualified buyers with the upfront costs associated with a home purchase. In addition, buyers should consider shopping around for a better rate, since different lenders may charge different rates and fees. Also, those who are shopping for home loans should try to avoid risky adjustable-rate mortgages and focus on the more stable, fixed-rate loans. Ultimately, buyers need to be prepared and know what to expect, before heading into the market. Nevertheless, there are still resources and strategies available that can help those looking to purchase a home in this challenging environment.