If you are in the market for a home, you are no doubt aware that interest rates are rising. In fact, we can expect the Fed to raise them again in the near future.
For that reason, this is a wise time to make a move on real estate. Below, we discuss the situation with interest rates in more detail and why buying now could help you save money.
What is Going on with Interest Rates?
The Fed kept interest rates low through the pandemic. Even though we are still in the midst of the pandemic, the Fed is having to adjust its policy.
The reason has to do with a couple of factors:
- High inflation. As Yahoo! reports, “The Federal Reserve looks set to raise interest rates in the face of high-flying inflation.” The site continues, “The Fed, meanwhile, appears to be messaging a 25 basis point rate increase in its next meeting in mid-March. But a hot jobs report that blasted through gloomy expectations of an Omicron hit is again adding fuel to conversation over the possibility of a more aggressive Fed rate hike.”
- Higher wages. CNBC explains, “Too much of a good thing, in the form of rapidly rising wages, is expected to push Federal Reserve interest rate hikes at an even faster pace.”
CNN points out the implications of higher interest for consumers, saying, “Americans will experience this policy shift through higher borrowing costs: No longer will it be insanely cheap to take out mortgages or car loans … The most tangible way this is playing out is in mortgages, where expectations of rate hikes have already driven up rates.”
How Could Buying Now Help You Save?
Here’s the thing—it is true that rates are rising, but right now, they are still quite low in the grand scheme of things.
In fact, it can even be worthwhile to make an offer over the asking price for a home to close before rates increase. The amount of money you could save on interest over the lifetime of the loan can still result in paying significantly less overall.
If you plan to stay in your home for many years, we recommend that you choose a fixed mortgage rate rather than an adjustable mortgage rate. That way, as rates rise, you will not need to worry about your rate potentially increasing.
Lock in Competitive Rates Now
Mid-March is just around the corner. So, now is the time to act if you want to lock in today’s low interest rates before The Fed takes action. To get started now, please give First Residential Mortgage a call at (540) 838-5868 to schedule your consultation. We work with homebuyers and homeowners in Blacksburg and throughout Virginia.