There is a reason why buyers have been clamoring to buy homes this summer. Mortgage rates are at a very competitive level and buyers want to capitalize on the opportunity to obtain affordable home financing.
But lately, mortgage rates have gone up. And last week they hit their highest level in a month – 3.06% for a 30-year fixed loan, according to the Mortgage Bankers Association.
Unsurprisingly, mortgage applications for home purchases dropped 2% over the week. The volume of applications also decreased by 19% compared to the previous year.
RefinancingMeanwhile, they fell 5% last week as existing borrowers defaulted on existing mortgages. Refinancing volume also decreased by 8% compared to the previous year.
6 simple tips to secure a 1.75% mortgage rate
Safe access to The Ascent’s free guide, which explains how to get the lowest mortgage rate when buying a new home or refinancing. The rates are still at their lowest level in several decades, so take action today to make sure you don’t miss the chance.
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Should today’s homebuyers worry about rising mortgage rates?
If you want to To buy a house, you clearly want to lock in the lowest mortgage interest rate as possible. But is it worth it to panic because rates have hit a monthly high? Absolutely not.
Firstly, rates have dropped to extremely low levels this summer, so their rise is not surprising. Think of it this way: When your favorite ice cream brand usually sells for $ 5 a pint, and you see it on sale for $ 2, it looks like an incredible deal. But if its price jumps to $ 3 a pint, that’s still good – just not as low as $ 2 a pint.
It’s the same with mortgage rates. Historically, today’s rates are still extremely competitive. And although they may be higher than they were a month ago, they are still worth going after.
However, it is important to be in the best possible position to catch low interest rate on mortgages… To do this, you need to have a high credit rating – ideally an average to the top 700 or higher. You will also want to log in with the minimum amount of preexisting debt, as it is too high debt-to-income ratio can make you stuck with a higher mortgage interest rate.
Will mortgage rates continue to rise?
Without the crystal ball, it is impossible to know exactly how mortgage rates will evolve over the next few weeks, as well as the next few months. But generally speaking, mortgage rates are expected to remain low not only until the end of the year, but also until 2022 and, quite possibly, in the subsequent period. Thus, you should not let the recent rate hike intimidate you.
When mortgage rates fall to record lows, they really can only go up from there. And just like you won’t give up your favorite pint of ice cream because you can’t find it at the lowest price you’ve ever seen, you shouldn’t pass up the opportunity to buy a home simply because mortgage rates are slightly higher right now. than they were at some point earlier in the summer.