Mortgage Rates Soar, but Home Buyers Still Active

Mortgage rates have been on the rise in recent months, but that hasn't stopped home buyers from entering the market. In fact, according to the National Association of Realtors, home sales in May 2023 were up 8.6% from the same month last year. So while mortgage rates are still creeping ever higher, home buyers are still entering the market. Here’s what you need to know about what’s going on in the industry right now.

What’s Driving Home Sales?

There are a few reasons why home buyers are still active despite rising mortgage rates. First, the supply of homes for sale is still very limited. This means that buyers are still facing competition, even though there are fewer buyers overall. Second, many buyers are motivated by the fear of missing out. They know that mortgage rates are likely to continue to rise, so they're trying to lock in a low rate before it's too late.

Finally, some buyers are taking advantage of government programs that offer down payment assistance. These programs can help buyers make a larger down payment, which can lower their monthly mortgage payments. Of course, rising mortgage rates are a challenge for home buyers. You’ll need to make a larger down payment or qualify for a higher-rate mortgage. But for those who are determined to buy a home, the market is still active.

How to Navigate Rising Rates as a Home Buyer

Here are some tips for home buyers in a rising rate environment:

• Get pre-approved for a mortgage before you start shopping for a home. This will give you an idea of how much you can afford and make the home buying process go more smoothly.
• Be prepared to make a larger down payment. This will lower your monthly mortgage payments and make you a more attractive buyer.
• Consider government programs that offer down payment assistance. These programs can help you make a larger down payment, which can lower your monthly mortgage payments.
• Be patient and persistent. The market is competitive, but there are still good deals to be found.

Even More to Think About

Rising mortgage rates are a challenge for home buyers, but they're not insurmountable. You can still buy a home and achieve your dream of homeownership. Here are some other things to keep in mind when buying a home in a rising rate environment:

• Be prepared to adjust your budget. As mortgage rates rise, your monthly payments will increase. This means that you may need to adjust your budget to accommodate the higher payments.
• Consider your long-term financial goals. If you plan to stay in the home for a long time, rising mortgage rates may not have a significant impact on your overall financial picture. However, if you plan to sell the home in the near future, you may want to consider the impact of rising rates on your potential profit.
• Shop around for the best mortgage rate. There are many different lenders out there, so it's important to shop around and compare rates before you choose a lender. You may be able to save money by shopping around.