Mortgage Rates Are Rising. Here’s What That Means if You Want to Buy a Home
Earlier this year, mortgage rates hit a seven-year high, fueling speculation that it was time to buy if you were in the market for a new house.
But mortgage rates have continued to climb since then — up nearly a full percentage point this year to 4.85% in mid-October. And data from the National Association of Realtors suggests potential homebuyers may finally be feeling the pinch.
Existing home sales have fallen 4% since January, and the number of new homes under construction has dropped 10% during the same period.
So far, a monthly mortgage payment on a $250,000 home has gone up about $150, Freddie Mac Deputy Chief Economist Leonard Kiefer told The Penny Hoarder. “And that is quite substantial.”
And with the Fed likely to raise interest rates further in the coming year, it will just get pricier to take out a mortgage in 2019.
“Economists across the board are starting to forecast higher rates,” Kiefer said. And a lack of new housing just keeps pushing home prices up.
Still, there is some pent-up homebuying demand. The U.S. has one of the tightest labor markets in years, so the market might see modest growth in 2019, despite rate increases.
So if you are ready to make the leap from renting to buying, there are concrete ways to find savings.
Mortgage rates and housing prices vary across U.S. cities and lenders, Kiefer said. So if you are still planning to buy a home, make sure to do your research on the local market. Also, shop around for the lowest mortgage rate possible.
Getting one additional quote before locking in a rate and buying a home could save you $1,500 over the life of the loan, according to Freddie Mac.
Once you find the right rate, here are some other slick ways to save money on your mortgage.
Alex Mahadevan is a data journalist at The Penny Hoarder. He’s feeling the sting of regret for not shopping around for his mortgage.