Mortgage Rates Surge, But Housing Market Is Looking Better For Buyers – Forbes Advisor


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Rates for home loans jumped this week, even as evidence points to a housing market that may be starting to tip in favor of buyers.

The 30-year, fixed-rate mortgage averaged 5.51% for the week ending July 14, up 21 basis points—one-one hundredth of a point—from the previous week, according to Freddie Mac. A year ago at this time, the popular product was roughly half that, at 2.88%.

The average 15-year, fixed-rate mortgage was 4.67%, up from 4.45% last week and sharply higher than 2.22% a year ago.

Those rates don’t include fees and other costs associated with obtaining home loans.

Related: Compare Current Mortgage Rates

What’s Ahead for Mortgage Rates

Most housing experts forecast mortgage rates to stay elevated, with rates ranging from 5% to 7% for the remainder of 2022. While that’s sharply higher than the past two years, there may still be opportunities for would-be buyers.

For one thing, more housing inventory is coming back on the market after hitting historical lows in late 2021.

“More homes have come up for sale this year compared to a year ago in 13 of the last 16 weeks,” notes a report from Realtor.com, released Thursday. “Many homeowners are ready to pursue COVID-delayed plans to sell, while capitalizing on still-high prices.”

Though home prices are still high, they are beginning to edge down from the peaks seen in recent months. The average purchase loan application was $415,000 last week, down from a record $460,000 in March, according to data from the Mortgage Bankers Association (MBA).

And there’s less competition: The number of mortgage applications to purchase was 18% lower than this time last year, according to the MBA.

As the Realtor.com report stated, “The pace of transactions is moderating noticeably as higher prices and interest rates take a toll on demand. At this rate, homes will start lingering longer on the market and sellers will have to contend with more competition.”

Is Now a Good Time To Buy a Home?

All these conditions spell opportunity for any buyer who can still afford a mortgage.

“I’m seeing a shift that feels positive to me,” says Joan Rogers, a real estate agent at Windemere Real Estate in Portland, Oregon. “There’s no question it is still a seller’s market, but it is one in which productive and collaborative conversations can be had. A seller dictating terms is not a conversation.”

While higher mortgage rates have eaten away some buying power for Rogers’ clients, she says many are revising their expectations on what they can afford in an effort to keep searching.

“People still want to be homeowners—they want the security, the opportunity for generational wealth, to not be at the mercy of landlords,” she says. “All of the reasons homeownership is compelling still exist.”

For anyone on the fence about whether it’s worth it to keep looking, Rogers advises considering the intangibles in addition to crunching the numbers: the ability to paint or make other renovations, to live in a house rather than an apartment, to have more space for yourself or an in-law, and so on.

“Look beyond the financial decisions to what larger life benefits this will have,” she says.

Related: How Much House Can I Afford? Home Affordability Calculator



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