Should You Wait for Mortgage Rates to Come Down?

Moshe Farber
12, Jul 2022

Are you a real estate investor or a first-time homebuyer waiting for the mortgage rate to drop before buying your dream property? 

The reality is you may have to wait a while before that happens.

Experts are predicting that real estate prices aren’t likely to go down anytime soon and they might even continue to increase, and with that so will rates. Although waiting for things to come down may seem like a smart idea, waiting may actually end up costing you more money in the long run.

So, what options are available for you to make your dream of home ownership come true in the meantime?

With the right mortgage broker on your side, you can explore various possibilities, such as refinancing and non-traditional measures. This blog post will discuss the viable options for securing a mortgage that’s right for you in today’s market.

Read on to learn what mortgage solution is best for you!

What Caused the Rise in Mortgage Rates?

First, a little background about what mortgage rates are and why they have risen. 

What is a mortgage rate? A mortgage rate is the rate of interest charged on a mortgage. Mortgage rates are determined by the lender and can be either fixed, meaning they remain the same for the term of the mortgage, or variable, fluctuating with a benchmark interest rate. Your mortgage rate will be largely determined by your credit profile. Mortgage rate averages rise and fall with interest rate cycles that have a major effect on the homebuyer’s market. 

Mortgage rates have continued to rise this year, affecting homeowners and borrowers alike. As of June of 2022, the national average for 30-year fixed mortgages reached the highest rate in over ten years.

Why are mortgage rates rising?

There are 4 main causes of the rise in mortgages rates:

●   Rising Inflation: In March of 2021, the consumer price index (CPI) reached 8.5% — the highest it’s been since 1981. As long as inflation keeps shooting up, you can’t expect the national mortgage rate to drop.

●   Federal Reserve: Another record-breaking factor that affected mortgage rates was the Federal Reserve’s 50 basis point raise in May of 2022, the biggest increase in over 20 years.

●    Low Home Supply: Today, fewer homeowners choose to move out of their properties, and the real estate industry cannot keep up with the nationwide homeownership demand.

●  High Home Demand: The remote and hybrid work setups allow more homebuyers to move farther away from cities, putting upward pressure on home demand in the suburbs and elsewhere.

Will Mortgage Rates Drop Soon?

Rising inflation, the Fed’s monetary policy, low home supply, and high home demand have inadvertently boosted mortgage rates. Most experts agree that the fixed mortgage rates will not drop anytime soon, at least not within the year.

According to real estate experts, these factors won’t be changing any time soon, so don’t wait for mortgage rates to come down before making a property move!

Frequently Asked Questions About Current Mortgage Rates

Below are some of the questions that real estate investors and first-time homebuyers alike are asking about current mortgage rates.

What Are the Current Mortgage Rates?

As of July of 2022, the average mortgage rate falls between 4.18% – 5.27%, depending on the loan type. Your rate could be a little higher or lower depending on factors like your credit score, down payment, loan type, loan term (e.g. 15-year fixed or 30-year fixed mortgage etc.) and preferred lender.

What Is the Lowest Mortgage Rate Now?

The rates vary by the borrower, but the lowest 30-year rates now fall in the 5% range (not taking into account discount points). If you can find a lender offering a rate below 5%, that would be ideal. With a perfect credit score and substantial down payment offer, you can enjoy below-average rates. However, you won’t discover your exact rate until you get pre-approved.

Do Experts Foresee a Housing Crash in 2022?

No, most experts do not expect the housing market to crash this year. There’s no need to worry about the 2008 crash happening again.

While property prices are currently over-inflated, the low supply and high demand should keep the industry afloat. Also, lending practices today are much healthier than before. You won’t see predatory lending practices or risky mortgage products nearly as often nowadays.

Should You Lock Your Rate Now or Wait for a Lower One?

Ultimately, only you can decide what’s best for your situation. It’s always best to address your distinct needs than to rely solely on the market.

However, since experts don’t see a mortgage rate drop anytime soon, it might be best to lock in a rate after securing your purchase agreement and comparing lender prices. In fact, mortgage rates are predicted to rise so locking in a rate now is the best choice. Waiting too long can cost you. Also, remember that you can always refinance whenever rates go down in the future.

How Do You Shop for Mortgage Rates?

First, contact three to five lenders that seem like a good fit for your needs. Apart from the rates, check out their customer service scores and online reviews. Afterward, ask your top picks for pre-approval to see the exact rates. Choose the provider with the best deal for your requirements.

Is Refinancing a Good Option for Interested Buyers?

Refinancing is the practice of financing something over again with a lower interest rate; this way, you could get a lower interest rate down the line.

However, whether it’s a good fit for you will depend on your situation. However, in most cases, if your current mortgage is above market rates and there’s an option to lower monthly payments later, then refinancing will work in your favor. If you’re in need of upfront cash, then you can do a cashout refinance.

What Other Alternatives Are There to Waiting for Mortgage Rates to Drop?

Sometimes, buyers have to get creative to get the best return on investment (ROI) for their properties. For instance, you can consider adjustable-rate loans now that you can refinance later. In most cases, these solutions are more financially rewarding than waiting for mortgage rates to drop.

Buy Your Dream Property Now

Remember, you shouldn’t wait for mortgage rates to drop before making a move on your dream property. If you have enough income and savings, a healthy debt-to-income ratio, and a good credit rating, a high mortgage rate should be the least of your concerns.

After all, if you work with a reliable mortgage broker, you can find viable financing solutions for your distinct needs.

Are you ready to own your dream home? Get in touch with our mortgage specialists by calling 888-ASTAR-11(888-278-2711) or emailing to kickstart the buying process today

Don’t wait for mortgage rates to come down! 

One of our brokers will find you the best mortgage options available at the lowest possible rates. 

Reach out to one of our ASTAR Home Capital mortgage experts today! Email or call 888-ASTAR-11 (888-278-2711) to start the loan application process.

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