May 23 2023

Put today’s mortgage rates in perspective

Worried about mortgage rates? Looking at the big picture can instill confidence before you purchase.

Mortgage rates have risen from the rock-bottom lows of the pandemic, returning to what many consider a “new normal.” With all the headlines about rising rates, it’s easy to forget that current mortgage rates are still below the historical average.

Today’s rates aren’t as high as you’d think

It’s important to understand how mortgage rates impact your purchasing power when buying a house. “Buying power” is the amount of house you can afford to purchase. This is information you’ll find out when you get *pre-approved for a mortgage. Today’s interest rates directly influence your estimated monthly mortgage payment on a house.

When rates rise, so does your projected monthly payment. This can cause your buying power to decrease.

If you’re thinking about buying a house, how worried should you be?

This is a great time to ease anxiety by putting today’s rates into perspective. Many homebuyers don’t know that:

  • Compared to the highs seen in the 1980s, current mortgage rates are historically low.
  • In 2020, we saw the lowest historical mortgage interest rates, triggered by the pandemic.
  • From a big-picture view, today’s somewhat higher rates are still seen as reasonable.

If you haven’t gotten a personalized assessment yet, you may not know how affordable your monthly payment could be.

Contact us to get started.

“Consumers should bear in mind that mortgage rates are still historically low. The historical average rate on a mortgage is 8 percent,” Nadia Evangelou, Senior Economist for the National Association of REALTORS®, said.

This can be seen in the chart below:

mortgage rates

*Source: 2023 data through March 9. All mortgage products are subject to credit and property approval. Rates, program terms, and conditions are subject to change without notice. Not all products are available in all states or for all amounts. Additional conditions, qualifications, and restrictions may apply. Please contact Academy Mortgage for more information. MAC324-1486009.

Right now, headlines may depict more sensationalized stories about rising rates that don’t put them in historical context. The truth is that 2020’s ultra-low rates couldn’t last forever.

But when you compare today’s rates to those of the 1980s, there’s no contest. Today’s rates are less than half of what they were in the 1980’s peak, even at current levels of inflation. (Another point of perspective: Canada’s home prices are significantly higher than those in the U.S.)

While mortgage rates are historically favorable, it’s still smart to look at where rates are heading:

  • Currently, industry forecasts suggest that mortgage rates have hit their peak and could soon start to decline.
  • As mentioned above, every rate drop increases your buying power, or the amount you can afford to buy.
  • Potential rate decreases may help recharge the housing market and motivate many homebuyers to purchase.
  • If a mild recession occurs, as the Federal Reserve has projected, mortgage interest rates may potentially drop even further.

“While inflation remains elevated, its rate of growth has moderated and is expected to decelerate over the remainder of 2023. This should bode well for the trajectory of mortgage rates over the long-term,” Sam Khater, Chief Economist for Freddie Mac, explained.

The outlook is good, but reaching out to a local mortgage expert can ease your mind.

Your local Academy Loan Officer can help you find out how much you can afford today, as well as tomorrow. If you’re not sure when you want to purchase, you can still get mortgage-ready for the future. Just request a complimentary personalized assessment.

A skilled Loan Officer can clue you into the many options you have for successfully navigating today’s market and walking away with an affordable mortgage. Making a few improvements to your credit score—so you can potentially qualify for a better rate—is just one example.

Another is using a specialty program like Academy’s *Pre-Approval+. Pre-Approval+ can help you gain early pre-underwritten loan status and strengthen your offer when you’re ready to make one. Though homebuyer activity has slowed, housing inventory remains incredibly tight, driving up competition. Early *pre-approval is still an important step to take to help your offer get noticed.

What to remember: Upticks in interest rates can naturally cause concern, but mortgage rates are lower than the historical average. Many housing authorities also believe rates are on the decline. Lower rates are likely to draw more prospective buyers back into the market.

This is a time when it can literally pay to work with an expert.

If you’d like to learn what’s going on in your market and find out a few ways to influence your rate for the better: That’s what we’re here for. Find your local Academy Loan Officer.

*Pre-Approval+ is not a commitment to lend. Please consult a trusted professional as personal circumstances may vary. No specific results are guaranteed. Not all applicants will qualify. MAC524-1486944.