Home Prices Expected To Lower Mortgage Rates
Home prices were at an all-time high last year in the US, meaning that many people who wished to become homeowners could not break into the real estate market. This year, home prices are still plenty high, but there may be a chance that prices will start to fall soon.
Since the start of 2022, mortgage rates have continued to rise. This steady increase means that while an average 30-year mortgage was placed at way below 4% in 2021, that same mortgage has risen to above 5% this year.
The Federal Reserve has also announced its plan to hike mortgage rates, which means that they are guaranteed to continue to rise. Rising mortgage rates can sound like a bad thing for people trying to buy homes. If you look at the bigger picture, you’ll see that rising mortgage rates will pull down home prices.
Expected Relief For The Housing Market
Rising mortgage rates mean that a regular mortgage borrower might be paying up to 38% more money for their mortgage this year than they had to pay last year. Not all is lost. Because of the rapidly rising mortgage rates across the US, fewer and fewer people have been willing to buy homes.
With demand falling considerably, many sellers have been forced to put their homes up for sale at much lower prices than they would have otherwise. As the months go on, more and more houses are hitting the market for lower asking prices to make up for significantly higher mortgage rates.
Looking at this in the long run, you’ll see that there will be much-needed relief in the housing market over the next few years, with homes becoming much more affordable for potential buyers. Additionally, as more homes are listed on the market, supply will far outreach demand, meaning sellers may have to lower their prices.
The Outlook On Home Affordability For 2022
While we expect homes to be much more affordable in the near future, what can be expected from the remainder of 2022? If you’re considering buying a house, you may want to hold off for a few more months.
As the year progresses, mortgage rates are rising rapidly. The expected decrease in home prices might take a few months to kick in.
However, we need to consider whether mortgage rates may rise so much that they effectively cancel out any benefit from lower house prices. It might be possible that home buyers lose out in any case. If rising mortgage rates are steady after some time, buyers might be in more luck. Overall, it’s hard to say how the housing market will fare in 2022 and the next few years.
Subscribe to our SMS Club
Join today to receive the latest help and updates!