Published on October 8, 2018
Are Mortgage Rates Increasing Every Month?
If you have been following mortgage rates in the news it may seem like mortgage rates are just increasing every month. But, are they? Experts have been predicting the return of 5% for years, is it finally becoming a reality? In addition to rising mortgage rates, home prices have been rising so and that combined with rising mortgage rates means what you could have afforded 6 months ago, you no longer can. Rates are unlikely to go back down much at all so if you are considering buying a home, now is the time to do it before rates and prices go up even more.
If it seems like mortgage rates have been increasing each month, they have been. We started 2018 around 4.04% for a 30-year fixed mortgage, and we are now hovering around 4.86%. If most predictions are accurate, we are headed towards 5% quickly so now is the time to lock in your rate if you want the lowest possible rate.
But, if you do not lock in your rate and mortgage rates do hit 5%, fear not! Home buying may cost slightly more but probably not as much as you think, as The Mortgage Reports notes, “As we head toward 2019, the five-percent mortgage is imminent and is indeed already a reality for many applicants. It’s a big psychological barrier, but perhaps not a financial one. The difference between 4.875% and 5% is less than $20 per month on the average mortgage size. Plus, as rates rise, home prices often fall. Buyers may not need to make sky-high offers to get a home…A hot economy is an enemy to low rates, and there’s little doubt we’re in a hot economy. The unemployment rate is at 3.7% — the lowest in about 50 years. There is now less than one unemployed worker for every available job. In other words, there are more jobs than workers to fill them…This worker shortage will eventually lead to inflation as companies pay more to hire and retain workers. These firms then pass on those costs via higher priced products. Higher prices for goods and services is the very definition of inflation….Inflation is bad for mortgage rates. The simple equation emerges: hot economy = inflation = higher mortgage rates.”