Many of you are seeing it in the field: Low inventory, houses flying off the market and a groundswell of demand from buyers. As a result, home prices are steadily increasing. Combine all those factors with signs of strength in the economy, and you have a recipe for another market change: higher mortgage rates.
The average for a 30-year fixed-rate mortgage jumped to 4.29 percent in early July—nearly a whole percentage point above where it was in early May, according to Freddie Mac.
While some industry watchers predict that rising rates could stall the positive momentum in housing’s recovery, I tend to agree with the school of thought that says the rebound will continue despite upward ticks over time.
Rates are still historically low compared to what they were before the recession hit, and prices are still affordable in many areas.
Will some homebuyers see a decrease in their buying power if rates climb too far, particularly young, first-timers or low-income families? Unfortunately, yes.
But it won’t affect all buyers.