There has never been a truer statement about the interest rate forecast for real estate financing than the one offered last year by Mark Flemingchief economist at First American:
"You know, the fallacy of economic forecasting is: Never try to predict real estate interest rates, because you will always be wrong."
Earlier this year, most experts projected that mortgage rates would gradually increase and would end 2022 in the high three percent range. It is only April, and rates have already exceeded these figures. Freddie Mac announced last week that the 30-year fixed mortgage rate is already at 4.72%.
Danielle Hale, chief economist at realtor.com, tweeted on March 31:
"Continuing on the recent trajectory, the mortgage rates would reach 5% in a matter of weeks. . . ."
Just five days later, on April 5, the Mortgage News Daily cited a rate of 5.02%.
No one knows how quickly mortgage rates will rise in the future. However, at least up to this point, they have not significantly impacted buyer demand. Ali Wolf, chief economist at Zonda, explains:
"Mortgage rates have jumped much faster and much higher than the most aggressive forecasts made late last yearAnd yet the demand for housing seems to be holding steady.
Until February, house prices, o number of people asking to see houses and the number of houses that received various offers have seen a substantial increase. However, much of the increase in mortgage rates occurred in March. We won't know the true impact of the increase in mortgage rates until the March real estate numbers are available in early May.
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Rick Sharga, executive vice president of market intelligence at ATTOM Data, recently contextualized the increase in real estate financing rates:
"Historically low mortgage rates and higher wages have helped offset rising home prices in recent years, but As home prices continue to rise and interest rates approach five percent on a 30-year fixed-rate loan, more consumers will struggle to find a property they can comfortably afford."
Although no one knows exactly where rates are going, experts believe they will continue to rise in the coming months. Meanwhile, if you are looking to buy a home, know that rising rates have an impact. As rates rise, it will cost you more when you buy a home. If you are ready to buy, it may make sense to do so sooner rather than later.
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