Historically low mortgage rates have been a huge help in spurring homebuying activity in recent years. Although there's been a recent uptick, rates won't skyrocket any time soon.
With home prices rising and the economy showing some signs of improvement, mortgage rates have been on the rise since May. The mortgage rate for a 30-year fixed loan jumped half a percentage point to 4.46 percent the last week in June, which marks the first time since March 2012 that rates crossed 4 percent, according to Freddie Mac.
Potential buyers who have a fixed income might find it more difficult to swing the increased monthly payment that comes with a higher rate. However, there's no reason to panic; rates are still historically low and housing is still very affordable. The rise in rates is inevitable as the housing market continues to recover from its downturn, and it's definitely a good sign that things are stabilizing.
If you're thinking about buying a home, consider moving forward with your purchase sooner rather than later to avoid paying more money if rates go up. Plenty of loan options, including FHA and VA, can work if you don't have a huge chunk of money saved for a down payment. And if you don't plan on staying in your home long, there are several adjustable-rate mortgage (ARM) options to choose from – but make sure that you'll be able to afford your monthly payment after the rate resets in five or 10 years.
If you've been on the fence about selling your current home so you can move up (or even downsize), now might be the time to get it sold. Low housing inventory in several markets is helping to push prices upward, increasing your home equity. That's good news for you as a seller; if your home is in good condition and it's priced right, it more than likely will sell fast – and for top dollar. Making the decision to sell your home soon also means that as a repeat buyer you'll be able to take advantage of mortgage rates while they're still reasonably low.
The bottom line: Rising mortgage rates won't put the brakes on the housing market. The only challenge in the current low-inventory market is finding the right home!
Contact a local RE/MAX agent today who can help you better understand all of your options and educate you about how rising rates might affect your buying power.