Recent reports have shown some bad news for individuals taking out mortgages on new properties. Mortgage rates are on the rise, with the median rate for a 30-year fixed-rate mortgage now at 4.45%. This is not only the highest level seen in the last three years but also the highest level seen since 2011.
The sharp rise in mortgage rates has been attributed to the continued increase in the 10-year Treasury note. This key rate directly impacts mortgage rates, as mortgage lenders typically base their rates off the rates of these notes. The same Treasury notes are now at nearly 3%, which is around .75% higher than the same period in 2017.
This influx in mortgage rates will mean more money out of the pockets of buyers. On a $300,000 mortgage, a quarter-point increase in the mortgage rate translates to an additional $175 more paid per month. This number is likely to go even higher in the coming months, with some experts predicting rates to reach as high as 5%, the highest they have ever been.
Those looking to enter the housing market should act quickly in order to try and get a more competitive rate. However, the immediate future doesn’t seem overly promising. Economists estimate that the average rate will continue to increase over the next few months, with a potential peak in spring.
The current mortgage situation is bad news for buyers, but it also presents an opportunity for those who are already homeowners. Now is the perfect time to refinance a mortgage or equity loan. It will not only provide a much lower monthly payment, but also lower the interest rate.
The recent rise in mortgage rates presents an interesting problem for prospective homeowners. It is becoming increasingly more expensive to enter the housing market, but for those who are already homeowners, it presents an opportunity to reduce monthly expenses and interest paid. It is worth considering whether to act quickly or to wait out the potential peak in spring.
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