Just when we thought they couldn’t get any higher, mortgage rates have been on the rise again lately.

Despite predictions of mortgage rates falling in late 2023, mortgage rates recently reached their highest level in over two decades:

If you’ve been considering making a move, these higher rates, coupled with higher home prices, can feel like a gut punch and might have you wondering whether you should delay your plans.

Here are a few things to keep in mind to help you make that decision.

Check out my Recent Video talking about unique opportunities that exist in the current market.

How Higher Mortgage Rates Impact You

With mortgage rates being substantially higher now than just a few years ago, home affordability has been impacted tremendously. A 1% rise in mortgage rates is roughly equivalent to a 10% rise in home prices. With home prices up over 40% in the past few years and mortgage rates being 4% to 5% higher than this time in 2021, it’s no wonder that many potential buyers have been forced out of the market.

As mortgage rates rise the monthly mortgage payment of your future home also rises due to the increased cost of borrowing money.

Ubran Institue explains how this is currently impacting both buyers and sellers:

When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes . . . Additionally, higher interest rates mean fewer homes on the market, as existing homeowners have an incentive to hold on to their home to keep their low interest rate.

Is putting your home-buying plans on hold because of current mortgage rates a strategy?

Much depends on where mortgage rates and home prices go from here.

Where are Mortgage Rates Heading?

The million-dollar question.

If you’re eager for mortgage rates to come down, you’re not alone. I speak to potential buyers each and every week hoping for the same thing. The truth is, nobody knows when they will and even the experts are having a hard time predicting where rates are heading with certainty.

Forecasts have been predicting rates to fall for months now, but the latest economic data is suggesting we might be in a higher rate environment longer than anticipated. This disconnect demonstrates just how difficult mortgage rates are to predict.

The best advice I can offer is: don’t try and control what you have no control over, including trying to time the market. As CBS News stated:

If you’re in the market for a new home, experts typically recommend focusing your search on the right home purchase - not the interest rate environment.

There are Opportunities

All hope is not lost and there are opportunities in the current market. As mentioned above, the mortgage rate impacts affordability and the monthly payment more than home prices do.

The new home builders understand this and are now focusing incentives on permanent mortgage rate buydowns.

What does this mean?

Many new home builders are currently offering incentives to prepay mortgage interest and permanently buy down the mortgage rate. That means even though mortgage rates are currently around 7.7%, it’s possible to buy a new home and get a 30-year fixed rate mortgage of 5.5% to 5.99%. Email me, Call me, or Text 469-388-0978 for additional information on the current best opportunities.

Resale sellers have also shown a willingness to offer closing cost incentives to be used towards a permanent mortgage rate reduction, with an acceptable offer, as well.

Bottom Line

The best advice is don’t try and control what you can’t control, especially mortgage rates. There are opportunities available in the current market. To see if any of those opportunities make sense for you and your family, Schedule a Call, as I’d love to learn more about your real estate goals and help you develop the plan that’s best for your situation.

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