Mortgage Rates On the Rise Again - What Buyers Need to Know

Last week, the week ending in October 14, 2021, mortgage rates rose above 3% again potentially signaling the end of the days of cheap mortgages for buyers. The mortgage rate for a 30-year fixed mortgage rose to 3.05%, and the average rate for a 15-year fixed mortgage rose to 2.3%. Buyers have been enjoying historically low interest rates for many months, but this rise to over 3% has market insiders seeing an end in sight for buyers.

Mortgage rates plummeted during the initial stages of the pandemic, ultimately reaching a record low in early 2021. These record low days saw a 30-year fixed mortgage fall to just 2.65%. By April they had risen again to 3.18%, but then came back down to below 3% for the summer of 2021. Now, the rate has risen again above 3%, and industry insiders believe they will only continue to increase. Freddie Mac chief economist, Sam Khater, says the rate will gradually increase primarily due to “tightening monetary policy” and growing inflation.

The rising mortgage rate is set to have huge implications for the real estate industry. Even though rates are still near record  lows, home prices are soaring to record highs. Rate increases, combined with the record high prices will only make homes less affordable for buyers. Many buyers are already being priced out of the market, and if mortgage rates continue to rise we will see this trend happening more and more.

The rising mortgage rates will also influence the refinance market for owners. With rates less desirable, homeowners will have less incentive to refinance. Already, the Mortgage Bankers Association is seeing less refinance applications.

While mortgage rates are increasing, home sales are continuing, indicating that buyers are still looking to purchase. Additionally, the supply of homes for sale is increasing which has caused the home price increases to slow. This may help to balance out the hit to buyers as the mortgage rates continue to grow.

Now is a great time to purchase Florida Keys real estate. Take advantage of this time, before the mortgage rates go up again and contact Broker’s Edge Realty to find your perfect home for sale in the Florida Keys to lock in today’s rate!