By Shelley Sakala
The most common question I’m being asked is, “What is going to happen to mortgage rates?” If you’ve been following the headlines, then you have probably even seen that rates have recently reached their highest level in over two decades. Yep, two decades!
That can feel overwhelming if you’re thinking about making a move. You may even be wondering whether or not you should delay your plans. Before you panic, here is what you really need to know.
How Higher Mortgage Rates Impact You
There’s no denying mortgage rates are higher right now than they were in recent years. And, when rates are up, that affects overall home affordability. Here’s how: the higher the rate, the more expensive it is to borrow money when you buy a home. That’s because, as rates trend up, your monthly mortgage payment for your future home loan also increases.
The Urban Institute explains how this is impacting buyers and sellers right now: “When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes . . . Additionally, higher interest rates mean fewer homes on the market, as existing homeowners have an incentive to hold on to their home to keep their low interest rate.”
Basically, some people are deciding to put their plans on hold because of where mortgage rates are right now. But is that really a good strategy?
Where Will Mortgage Rates Go from Here?
If you’re eager for mortgage rates to drop, you’re not alone. A lot of people are waiting for that to happen. But here’s the thing, no one knows when it will. Even the experts can’t say with certainty what’s going to happen next.
Forecasted rates will fall in the months ahead, but what the latest data says is that rates have been climbing lately. This disconnect shows just how tricky mortgage rates are to project.
Advice for North Phoenix Buyers and Sellers
If you’re a local buyer, you may be feeling a little bit discouraged right now, but it’s important to remember that you’re not alone. Everyone else is facing the same challenges. The most important thing is to have a plan and to work with a team of trusted professionals. Your lender and real estate agent can help you understand your options and find the best home for your needs and budget.
Here are a few tips for today’s buyer:
Get pre-approved for a mortgage. This will give you an idea of how much you can afford to borrow and what your monthly payments will be.
Be flexible with your budget. You may need to adjust your price range or down payment amount in order to qualify for a mortgage.
Ask about rate buydowns and creative financing available to you.
Be prepared to act quickly. The housing market in North Phoenix is still competitive, even with higher interest rates. Homes are selling quickly, so you need to be ready to make an offer when you find the right one.
If you’re a local seller, you may be wondering how higher interest rates will affect your sale. The good news is that the housing market is still strong, and inventory is low, even with higher interest rates. There is still a lot of demand for homes in North Phoenix, so you’re likely to get a good price for your home.
Here are a few tips for today’s sellers:
Price your home competitively. You don’t want to overprice your home and risk scaring away potential buyers.
Make your home show ready. This means decluttering, making repairs, and staging your home to appeal to buyers.
Be flexible with your closing date. Some buyers may need more time to close on a home because of higher interest rates.
Work with a trusted real estate agent. Your agent can help you market your home to potential buyers and negotiate the best possible sale price.
The best advice for buyers and sellers in the area in a high interest rate environment is to be patient and flexible. The housing market is still strong, but it’s important to be realistic about your expectations.
If you’re a buyer, be prepared to act quickly and be flexible with your budget. If you’re a seller, price your home competitively and be willing to work with buyers.
With the right team in place, you can still achieve your real estate goals, even in a high interest rate environment.
Shelley Sakala is a local realtor and owner of The Sakala Group Real Estate.