Mortgage Rates May Rise in 2022, Should You Buy Now or Wait?
Finding the right time to buy a house can be tricky with the fluctuating market. During the past year and a half, houses have been selling so quickly that sometimes there wasn’t even time to complete routine inspections. Buyers were eager as well, with 24 percent of housing purchases being all-cash deals. However, if mortgage rates climb in 2022, and prices remain higher than ever before, is it a good time to buy a home? GOBankingRates talked to real estate experts about how you should approach buying a home in the year ahead.
Even With a Slight Rise, Interest Rates Are Still Really Low
In December of 2020, America saw record low interest rates, with the lowest being 2.68 percent. The average rate was about 3.11 percent throughout 2021. This is still very low in comparison with the past decade. If rates go up in 2022, those in real estate predict it won’t be by much, making it still a really good time to buy. Mike Faraci has 16 years experience in real estate and mortgages and is currently Director of Content & Education at Homebuyer.com. Faraci said if you’re considering buying a home, you should buy one in 2022, even if interest rates aren’t as low as they were in 2021. “Interest rates are only one part of the equation in a home purchase. Home prices move up and down, as well. And history tells us that, long term, home prices go up. Any buyer. who waits for a lower interest rate is also risking a higher purchase price when they buy.” Faraci said. He went on to say it’s less about getting the lowest interest rate possible and more about buying at a time that’s right for you and your family. “If you can buy a home you love, for a monthly payment you’re comfortable with, then it’s a good time to buy. Homeownership is the biggest, and most accessible, wealth building tool in America. There’s no need to put that off to roll the dice on getting a better rate down the road.”
Evaluate Where You’re Looking to Buy
Not all real estate markets are the same. Though some areas like Nashville, Phoenix and Austin are considered really hot markets right now, the area where you might want to buy might not be seeing the same high demand, which affects how quickly and how much housing prices will rise. Jordan Fulmer is a real estate investor and the owner of Momentum Property Solutions, and said interest rates are going to increase no matter what to curb inflation, but if you’re looking to buy in a place without big demand for real estate, you might be better off waiting. “In this case, home prices are likely over-inflated, and waiting for a market correction driven by higher interest rates will likely allow buyers to buy a home at a significantly lower price,” Fulmer said. Fulmer also continued to say that a higher interest rate isn’t the end of the world, so long as the price is right. “It is better to buy a home at a lower price with a higher interest rate than the other way around. This is because you can always refinance at a better rate later on when interest rates drop, but you’ll be stuck with the price you pay for the home over the life of your loan.”
If You’re Going to Buy in Hot Markets, Act Fast
People GoBankingRates spoke with said that if you’re serious about buying a home in a hot real estate market, the faster you can, the better. Lambros Demos, a real estate broker, said waiting to buy could cost you. “Home prices are going up faster than interest rates, so the longer someone waits, the more they’ll end up paying, or worse, they will not be able to get in at all. As the old adage goes, don’t wait to buy. Buy and wait.” Demos said.
Heather McRae, a loan officer, agreed with Demos, saying if you’re waiting for interest rates to drop, you’ll be waiting a long time, which will then jeopardize your eligibility to buy a home. “Rates are going up and they’re going up faster than they were expected to a month ago. There will be people who qualify to buy a home now who no longer can qualify to buy a home once rates increase to a certain level,” McRae said.
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