We keep hearing it over and over – buyers, hold out for the mortgage rates to drop before you buy. The thing that people aren’t realizing though, is that this advice is coming from people who don’t know the market, or from people who have no experience in real estate.
Of course, everyone wants low-interest rates when buying a home. However, if you look at the big picture, even current rates in the 5-7% range are tracking low compared to what we’ve seen in the past. And if you do lock in at these rates, which may seem scary, you can always refinance when they do drop.
The good news is that today, we are starting to see a drop in the rate of inflation. This is resulting in mortgage rates dipping below last year’s peak already.
In an article from Keeping Current Matters, Sam Khater, Chief Economist at Freddie Mac, shares:
“While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023.”
Now, while this does create more opportunity and power for buyers, you shouldn’t expect rates to drop back down to record lows as we saw in 2021. Furthermore, you shouldn’t wait for them to drop before purchasing a home.
Greg McBride, Chief Financial Analyst at Bankrate, explains:
“I think we could be surprised at how much mortgage rates pull back this year. But we’re not going back to 3 percent anytime soon, because inflation is not going back to 2 percent anytime soon.”
So, the real question is, how do you know when it’s the right time to buy? The answer is actually pretty simple. The right time to buy is when YOU are ready. This means, when it makes sense for you and your family, and when you can afford it, regardless of rates. There are always options for mortgage loans to help get your costs down, and you can always refinance down the line if and when rates do drop.
The bottom line is that holding out for a 3% rate is a mistake.
Let’s connect and see how we can help you find your home and begin the process of becoming a homeowner today.