Should I be worried?
Many home buyers are feeling pain because mortgage rates have gone up. Likewise, the home values are at an all time high. But let’s deal with one of these issues, mortgage rates.
At the time of this writing the 30-year-fixed mortgage interest rate is 6.5% (Feb 23, 2023). Buyers who saw the rate at 2.6% in December 2020 are probably wishing they had taken advantage of it then. In hindsight, yes, perhaps it would have been a good idea to buy in December 2020, specially when the following year’s pandemic upset the housing market to unseen proportions.
When I bought my first home, I believe the rate was around 6.5% (this was in 2001), perhaps a tad higher. We were first-time buyers and with programs in place we were able to purchase our first home. It was one of the most sound investments I have ever made.
If you’re planning on buying a home and the “stars” are lining up for you, like you can afford it but you feel interest rates are just too high, I would encourage you to take a closer look at the history of home values and interest rates in this country. Here are a few reasons why I recommend this could be the best time to buy:
- There are more homes on the market today than 2 years ago.
- Home values are stabilizing or going down, depending on where you live.
- Mortgage rates could still go up ¿¿¿????!! (yes they could).
Would you believe me if I told you in the past we’ve seen interest rates go higher than 10%? How about higher than 15%? Well, yes, it’s happened.
18.63%
You read that right…18.63%. Back in October 1981 the 30-year-fixed rate mortgage average in the U.S. was 18.63%.
Here’s a historical look at average mortgage rates in the U.S. since 1971:
Source: Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States [MORTGAGE30US], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MORTGAGE30US, February 26, 2023.
Ann Hoff Fanaian, for Roads Home Realty