What's colder than Minnesota in spring?

What's colder than Minnesota in spring? HINT: It's NOT the housing market.

In the past 12 weeks, we've seen the fastest mortgage rate increase in over 40 years (the 30-year fixed rate is hovering around 5% this week). But here's the catch: even the higher mortgage rates aren't cooling the housing market. With such low inventory, homes are still fetching a good price.

Ok, so it's still a great time to sell. But what about buying? Aren't mortgage rates too high already?

SPOILER ALERT: Mortgage rates are not anywhere near an all-time high.

In 1981, the average annual 30-year fixed-rate mortgage rate was 16.63% according to data from Freddie Mac. We also spent most of the 90's with rates between 7%-10%. While many of us may not have experience buying a home at those rates, it certainly helps put things in perspective.

Despite the rising rates, it's still a great time to buy a home. Why? Because while experts do expect home price growth to soften, they don't expect home prices to crash. But every bump in the interest rate greatly reduces your purchasing power and mortgage rates are forecast to continue rising in the coming year.

According to a source at Keeping Current Matters, you'll see that at an interest rate of 4.75%, a monthly payment of $2295 could have gotten you into a $440,000 home. However, at an interest rate of 6%, that same payment amount only qualifies you for around $380,000. That's a $60,000 difference! 

Bottom line: It can be painful to think about getting into a 30-year fixed rate at 5% when we saw them below 3% just one year ago. But waiting could just end up costing you more. 

Would it be helpful to talk with one of our lender partners? Are you interested in learning about loan programs for first-time home buyers or for home owners who want to buy before they sell? Contact your Cedar Haven Real Estate Group agent today!