Mortgage rates are hitting new highs that match pre-pandemic rates — and it’s happening much sooner than many experts expected.
Rates were recently clocking in at an average of 3.75 percent, which borrowers haven’t seen since early 2020.
While many experts predicted rates would reach anywhere from 3.5 percent to 4 percent by the end of the year, most weren’t expecting it to happen in the first month of 2022.
Experts say these rates are unlikely to slow down until the Federal Reserve begins its interest rate increases to curb inflation.
Market experts are anticipating the Fed will make these increases sooner than expected, and there are talks that more increases may occur than the three originally planned.
Until then, borrowers will have to navigate current rates.
Record-low mortgage rates during the pandemic, combined with a lack of home inventory, resulted in record-high home prices that have not yet calmed down.
These issues are continuing, even as rates rise, because supply chain problems and lack of inventory have made buying competition even hotter.
Mortgage and finance professionals don’t want all buyers to be discouraged from purchasing, though.
They advise that borrowers focus simultaneously on boosting their credit scores while saving as much as possible for a down payment.
Prior to applying for a mortgage, experts say borrowers should refrain from opening or closing any new loans or credit cards, and paying down revolving debts as low as possible.
Financial advisors recommend shopping around for the best rates from lenders, and carefully taking into account the total purchase price in addition to monthly payment amounts.
To get started, potential homeowners can begin closely monitoring their credit and putting an appropriate budget in place, experts say.
Sometimes, there are errors in credit reports that affect scores. Monitoring credit can help catch these errors and help borrowers keep track of what’s affecting their scores the most.
While there are many factors in the homebuying process that are out of a borrower’s hands, experts say focusing on what they can control will help them score the best rates for their personal financial situation.
For homeowners who have been wanting to refinance, the rates still are favorable, experts say. In the years prior to the pandemic, rates were around 4 percent or higher.
While rates hover in the average 3.5 percent range, there are still opportunities to get a good rate.
For those looking to refinance to a 10-year or 15-year fixed term, rates recently were still under 3 percent, clocking in at 2.6 percent and 2.8 percent, respectively.
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