I got my Real Estate license in June of 2002. April of 2002, home loan rates were 7.13%. Per CNN, as of yesterday afternoon, mortgage rates were 7.09%. Well, damn. Copied & Pasted a section of that same article for you. See below the picture that I pulled from one of my fave lenders. Definitely seems right today. Do you think we'll feel it's right in 2028?
Rates and home prices expected to stay elevated
With inflation still a concern for the Fed, home buyers can expect borrowing costs to stay elevated.
The bottom line for home buyers is that it will continue to be difficult to find affordable homes as rising mortgage rates are tacked onto already elevated home prices.
This year home buyers have seen rates rise a whole percentage point from the lowest point of 2023, 6.09% in February, to this week’s 7.09%. Compared to a year ago, rates are nearly 2 percentage points higher.
Today’s mortgage rate is 196 basis points higher than a year ago when rates were 5.13%, which means that for the buyer of a median-priced home, the monthly mortgage payment is 17% higher.
More than 90% of homeowners with mortgages currently have a rate of 6% or lower, according to a recent Redfin study, meaning they are staying in their current home, not selling and trading up, which would come with higher borrowing costs. This is making the number of already built homes available to buy extraordinarily low — keeping prices elevated for those looking to buy.
A homeowner who bought a median-priced home with a 20% down payment in January 2022 with a 3.1% mortgage rate is paying about $1,300 a month. That same home at today’s rate would mean a $2,300 monthly mortgage payment, excluding taxes and insurance. Well, Damn again.
For current homeowners who decide to sell, high home prices can help ease the blow of higher mortgage rates. “It is not surprising that with equity near all-time high, over one-in-four buyers is paying all cash for their next home.”
But unlike existing home owners who can leverage home equity – which is near all time high – to reduce the size of mortgage loans, first-time home buyers are facing much more challenging market conditions.
Plus, with asking rents dipping for two consecutive months, according to Realtor.com, potential first-time home buyers may not feel the same urgency to expedite their home purchase as they did when rents were escalating at a double-digit pace.
“This may result in slower sales churn, but it also provides potential home shoppers with an extended timeframe to carefully consider crucial decisions during the home buying journey.”
Hard Decision To Make, Yes?
