Mortgage rates seemed higher than ever starting near the beginning of 2022, and they’ve been on a steady incline for most of the year. Recent drops within the last few weeks of December have caused many potential home buyers to question whether or not the decline will continue and if they should wait a bit longer before deciding to purchase a home. 

Experts have conflicting opinions on whether or not the decline in mortgage rates will continue throughout next year: some say that rates will remain steady while others believe that they will continue to climb throughout 2023 until inflation is under control. Without knowing exactly what the future holds, you may find yourself asking these same questions and waiting to pull the trigger on buying a new home.

What Affects Mortgage Rates?

Recently, mortgage rates are affected most heavily by two factors: both high inflation due to the COVID-19 pandemic and also actions taken by the Federal Reserve to restrain inflation have caused mortgage rates to skyrocket. High demand for mortgages can also push inflation to the upper limits due to less available capital for lending. 

Pros of Buying a Home Now

Accurately predicting mortgage rates for the next coming years isn’t possible, especially considering how drastically they’ve fluctuated within the last two years. But higher rates don’t necessarily mean bad news for people who want to buy a home now. 

A lower inventory of houses pushed home buying competition to its limits in the last two years, causing home prices to soar. With higher rates, competition has decreased significantly. Buyers may even find themselves with more leverage during negotiations due to a decrease in demand. When rates eventually go down, the housing shortage problem will cause competition to spike once again and sellers will be more inclined to jack up the prices of their property to profit as much as possible. 

With competition at its highest, home offers with contingencies like appraisals and inspections were often being ignored in favor of simpler offers. With less competition, you can be sure that you’re able to get both an appraisal and an inspection of your new potential home, which ultimately lowers your risk as a buyer.

Finally, potential buyers should consider the possibility of refinancing once rates go back down. A high rate doesn’t necessarily have to stay high forever if your credit remains solid and you’re able to refinance when rates are lower at a later date. 

If you’re looking to buy a new home now, news from the Federal Reserve and about skyrocketing mortgage rates may scare you away from deciding to make an offer on the home of your dreams. Luckily, higher rates don’t necessarily mean you’re doomed to regret buying a home now. There’s always a lot of different information to consider, and when in doubt, contact me to learn more about your options!