2018 has been noted by many analysts as the ideal year to buy a home or investment income property. If you are thinking about buying a home this year or at least within the next 12 months, the current mortgage rate trends should factor into your decision.
Mortgage Rates Since 2000
For most of the last 18 years, mortgage rates were steadily declining. The last time that rates hit a real peak was in 2000, when 30-year fixed mortgage rates were tracking at 8.64%. Since then, there has been movement up and down, but the overwhelming chart position has been downward.
In November 2012, rates hit the lowest that they’ve been in the last 20 years, with 3.31% being the bottom of the charts before things started to slowly pick up again. Today, rates are at 4.53%, compared to 3.97% at the start of the year.
While there are still ebbs and flows on the charts, the overwhelming trend is that rates are now rising. Keen eyed buyers will find months where fixed rates slide, but these will become less common.
Unfortunately, things will only get worse as the economy strengthens. The Federal Reserve is likely to raise interest rates twice more in 2018, and all data suggests that there will be further rate hikes in 2019 as the economy continues to perform well. This will have a direct impact on mortgage lending rates.
Affordability is More Than Just House Price
The big story in recent weeks has been the record high house pricing. Some markets are priced far beyond the affordability index, including areas of the Pacific Northwest, Northeast, and states like California, and Colorado. While there are outliers to be found with more affordable housing, the trend in major centers is that prices are going up.
High prices combined with rising mortgage rates will result in a market that only becomes less accessible for the average American family or investor.
It’s Still the Time to Buy and Sell
It doesn’t matter what side of the market you are on; current conditions are not going to last forever. As rates trend upwards, demand may decrease, and this means that sale prices will likely come down. In such a situation, there are no real winners. Sellers will receive less of a return on real estate investment, and buyers may get better prices, but they will be offset by higher mortgage rates.
As has been the story throughout 2018, sooner rather than later is the ideal time to buy and sell in this rapidly growing economy.
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