Should you wait for Lower Mortgage Rates to buy a new home?
For many, mortgage rates are the deciding factor in whether or not to buy a new home. Compared to relatively high rates in the past few years, we saw historically low rates in 2020 - hitting new record-lows 16 times, reaching a low of 2.72% for the year (compared to rates of 3.97% in 2019). As a result, buying a home has been much more affordable, encouraging many potential homebuyers to move forward with their plans.
Many hopeful homebuyers are now wondering if they should put their plans on hold and wait for even lower rates as they seem to continue to decrease. However, this may not be the right move. The reality is that these rates will not last forever, and with such uncertain times ahead, acting sooner rather than later may be the actual win if you’re ready to buy a home.
Rates will not stay this low.
While only a slight increase in mortgage rates is projected for 2021, some experts believe they will in fact continue to slowly rise from here on out. For example, since the start of 2021, the average rate has increased slightly to around 2.85%. Although this is not a major increase and is significantly low compared to previous years, it is a tell-tale sign that as the country returns to normalcy, rates will continue to do the same. Seeing this trend, borrowers are smart to take advantage of lower rates now before they increase - it is not worth the risk of waiting it out when making such a huge financial decision. Rates can change in an instant!
Why does it matter?
As mortgage rates continue to rise, the overall cost of purchasing a home will continue to increase as well. That means the higher the mortgage rate, the higher your monthly payment will be - especially considering home prices are still rising as well due to current market conditions like low inventory and high demand. It is likely that homes will never again be as affordable as they are right now. This is important to note as you could sell your home at a higher price than normal and also benefit from a lower monthly payment when purchasing your next home. Making a move right now means getting the most value and the best deal! This is also essential for buyers to note who are looking to upgrade to a bigger home that may have been out of their price range in the past - now is the time to do it.
What does this all mean?
As more buyers continue to hit the market - especially as the typically busy spring market fast approaches, it will likely become even harder to find a home in the coming months. It is much better to take advantage of the low rates that are available now, rather than waiting for a future decline that may never come.
If you are considering buying a home or making a move, reach out and let us help you decide if now is the right time for you!