Mortgage rates up 3-4% this year, but realtors say you can still buy
SIOUX CITY (KTIV) - Here’s the bottom line: Yes, interest rates have increased about 3-4 percentage points just this year.
Data shows how interest rates have climbed throughout 2022. But historical trends say we haven’t exceeded our highest rates in history. We’re nowhere near the 18% interest rates we had in the 1980s.
However, it took decades for those rates to fall. In the last year, those rates have risen four percent. Realtors say that’s caused by the pandemic creating extremely low-interest rates, with the government now trying to correct the economy and prevent inflation.
”Basically, coming off of the pandemic and trying to get the economy going, well, now we’ve got the opposite problem. We’re trying to slow down the economy and get that inflation under control,” said Kevin McManamy, the president of United Real Estate Solutions.
A mortgage loan officer we spoke with said some consumers are worried about the rising rates, but she believes most are worried about their monthly payments.
Remember, Rocket Mortgage said the interest rate is the cost of taking out a mortgage to pay for the home. They say the higher the interest rate, the less likely first-time home buyers are to purchase.
”I think people have already adjusted to rate being what it is. It is what it is. Should you stop buying homes now? No. Do we need to adjust to it? Yes. Have we come from a 10, 15 year low? You know, yes,” said Angie Van Otterloo, a Central Bank Mortgage Loan Officer. “But people are still buying homes every day.”
If you buy a home, realtors say it’s an asset you can sell later on down the road. Each payment you make also builds “equity,” essentially increasing your share of the home and decreasing the bank’s share.
When you rent, you don’t build equity and you don’t own the property. However, renters are generally not responsible for maintenance, and lease terms are normally much shorter than a traditional 30-year mortgage.
All the professionals agree: Buying a home is a fact-specific situation. You’ll never be able to ‘time’ the market, but renting could be more beneficial in some circumstances.
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