Should I Wait for Better Rates?
The FED is working on slowing down inflation which has caused mortgage rates to increase at levels we have not seen since 2008. We have definitely noticed a pause in the market as some buyers have stepped aside wondering if they should wait until rates come back down. Waiting may bring you a better rate, but the real question is: will you get a better deal by waiting?
A Look at the Numbers…
In the spring, market interest rates were around 4.5%, and a home listed at $500k would likely have been bid up to $550k in multiple offers. In comparison, October interest rates were around 6.5%. A home listed at $500k may have sold for list price. Not to say there weren’t still multiple offers, but they were becoming less common. Most buyers were finally able to purchase without competition.
Potential Scenarios in 2023…
- Once inflation is under control, it is predicted that the Fed will ease rates. It’s hard to predict how high they will go before easing back down. This process may take a while.
- Buyer demand is still present albeit less than before. If rates were to fall under 5%, widespread multiple offers may come back into play.
- If rates do dip back down, it will be a big win for those who purchase(d) this fall/winter. They were able to take advantage of purchasing with less competition and then would be able to refinance with a reduced rate. For example, the $2370 monthly payment in the example above would be $2013/mo @ 5% and $1856/mo at 4.5%. Both scenarios are lower than the buyer who purchased a similar home in the spring market of 2022.
So…Our Advice: Secure the House, and Watch the Rate!
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