According to the Washington Post, over the past 18 months, mortgage rates have more than doubled as the Federal Reserve has repeatedly increased interest rates to fight inflation. Mortgage rates jumped to their highest level in more than two decades, with the average 30-year fixed loan coming in at 7.09 percent the week before this August 18, 2023 article was published. Read the full article here, we recommend it!
Mortgages have become more expensive because of the Federal Reserve’s campaign to get inflation under control by raising short-term interest rates to try to cool down the economy. This also causes longer-term rates like mortgages to also rise (see what experts say about this in an article from CBS News here).
The higher rates make home-ownership less affordable for many would-be buyers who rely on home financing. Similarly, the higher rates have also made potential sellers reluctant to sell their current homes for those who would likely have to pay more in mortgages for their next house purchase. However, industry analysts point out that home buyers still bought homes and took out mortgages when mortgage rates climbed throughout the 1970s and reached more than 18 percent in the early 1980s.
When home buyers with concerns on the high interest rates ask us when is the right time to buy, we advise buyers that the decision is based on their own readiness to buy and comfort level. Here on St. Croix, every property is truly unique. As we tell people, it may be your “forever home”, but it doesn’t have to be your “forever loan”. When interest rates go down, you can refinance, and you will have the property you love!