What do high interest rates mean for buyers?

Dated: January 1 2024

Views: 297

When looking to purchase a home there are many things to consider, especially when it comes to financing. The average home buyer will not be purchasing a home with cash so interest rates become a point of contention when looking at financing options.

A lower interest rate is always ideal, but not always the reality when you’re looking to buy. 

Interest Rates Over the Years

Over the last year, we have seen some of the highest interest rates since 2000, reaching 7.53% for homes $726,200 or less for the week ending September 29. (Source: Realtor.com) It’s important to note this is not the highest we’ve seen in the last 45 years. Historically 1981 holds the record high when it comes to the average rate for that, reaching 16.63%.However, it’s also not the lowest we have seen. In 2021 we saw mortgage rates reach as low as 2.96% on the 30-year mortgage. 

All of this doesn’t change the fact that many are struggling to decide if they should buy with the current mortgage rates. Everyone’s situation is different so it’s important to consider what this means for you and your financial situation. 

Many wonder if they should buy now in case the rates continue to increase or wait until the rates drop. There’s always a “what if” when considering, what many can say, is the most important investment you could make in your lifetime. 

What do our Agents Say?

I took some time to ask our agents what they would tell someone who is concerned about current interest rates and struggling to decide whether to buy now or wait it out. 

“Buy a home that you can afford on your current budget comfortably. Because when the rates drop, the market will get aggressive and you will be able to refinance, but won’t have to deal with the madness.” Robbie Moore, NextHome South Pointe 

Robbie, from our Gainesville office, touches on an important point that everyone needs to remember when looking to purchase real estate. Everyone’s situation is different and everyone needs to be realistic about what they can comfortably afford right now. Not everyone can afford their forever home yet, get what you can afford today and refinance when you have the opportunity. 

Kimberley, also from our Gainesville office gives us three points to consider:

“It depends on why they are concerned. I’d ask more questions first, but three things that come to mind are:

If you spend $1500/mo on rent for 5 years you will have paid $90,000 of someone else’s mortgage. If you have the ability to buy it could be a good idea even if the interest rate is a little higher.

If interest rates drop you can refinance and several lenders I know will waive their fees. 

If interest rates start going down, home prices may start going up.” - Kimberley Brown, NextHome South Pointe 

Talk to a Lender About Payment Buydown Programs

These programs can help buyers save money on their monthly payments and it can also benefit sellers. “Rate buydowns have obvious benefits for home buyers. But they also can be hugely beneficial for sellers too. Not only can it help you sell faster, but in certain situations, it could also help you walk out with a higher profit than reducing your home price.” - Kristen Eck, NextMortgage 

  • There are two programs to ask about:
  • Temporary Mortgage Payment Buydown
  • Permanent (Discount Points) 

Kristen Eck from NextMortgage goes into great detail discussing how these programs work and how to negotiate them when purchasing a home in this blog post.

Conclusion

If you want to buy a home don’t let news headlines and and confusing data scare you into making a decision you might regret. It’s important to talk to a real estate export and a mortgage lender to discuss your specific situation, the options, and ultimately make the best decision for your life. 

Latest Blog Posts

Spring Events in St. Petersburg, Gainesville, and Cape Coral

Local Events in our CommunitiesIf you don’t know NextHome South Pointe has three offices; Cape Coral, Gainesville, and St. Petersburg. One of the reasons we love these cities is because of the

Read More

Detailed Timeline of the Homebuying Process

Homebuying TimelineBuying a home is an exciting and significant milestone in anyone’s life. However, the process can be complex and overwhelming, especially when it comes to purchasing a home.

Read More

Spring Home Maintenance Tips

Whether you’re thinking about selling or not everyone knows spring is a great time to work on home maintenance. If you work on small things now whenever it comes time to sell you won’t

Read More

Spring: The Perfect Season to Buy or Sell Your Home?

As spring approaches you may wonder if it's a good season for real estate. Every season has it's pros and cons, but the real estate market definately comes to life during the spring season. Whether

Read More