Mortgage rates continued a steady rise this month, hitting their highest level last seen in more than a decade. The average rate on a 30-year mortgage is 5.11%, in the week ending April 21, up from 5% the week before, according to Freddie Mac. Mortgage rates were only averaging 2.97% during the same period last year.
This is the highest mortgage rates have reached in the last 12 years. The last time mortgage rates reached this high level was in April 2010, that time mortgage rates hit 5.21%.
Buying a house in South Carolina continues to get more expensive quickly too, with mortgage rates crossing 5.30% for a 30-year fixed, and 4.46% for a 15-year fixed, as of this posting.
Springtime is typically the busiest home-buying season, but the continued rise in rates has caused some volatility in demand as more buyers find themselves unable to afford the much higher payment on today’s real estate. Entry-level homes are harder to find because there are so few on the market.
What’s causing the rise in mortgage rates?
Experts say that the cause of these surging rates is inflation. According to the Bureau of Labor Statistics, the consumer price index was up 8.5% y-o-y. To curb the persistently high inflation, the Federal Reserve has started raising its benchmark short-term interest rate from the near-zero levels it has been in the past few years. Mortgage rates aren’t directly connected to that rate but they are correlated. When Fed raises rates, it makes loans more expensive as both businesses and consumers end up spending more on interest payments.
Rates impact on home prices
The rise of mortgage rates will likely ease demand for homes as more buyers are getting priced out of the market but given low inventories are still prevalent, home prices will likely stay even though the demand has lessened.
In Greenville real estate market, there were only 2,049 active listings in March. We’ve seen a slight increase in months’ supply of homes to 1.4 percent, slightly higher than February’s 1.3. Still, there is not enough supply to meet the demand.
How to deal with rising mortgage rates
Firstly, it pays if you understand what you can actually afford. When buying a house, the mortgage rate isn’t the most important thing. Getting a payment you can afford at a time when you’re ready to get a house is more important. When you have determined how much home you can afford, then shop around for a mortgage.
Get quotes from different lenders. Work with a lender who has an extensive product offering, transparent in their pricing, accessible to borrowers, and has a reputable history. In these times, it’s important to shop and compare a few mortgage lenders before committing.
Another way to compete amid higher home prices is to get preapproved. Preapproval makes you a little more competitive in this tight Greenville real estate market.
Source: GGAH
