Don't Be Too Worried About the Rate Hikes
If you’re worried about the recent rise in interest rates, you shouldn’t be.
Yes, interest rates have risen about a half of a percentage point since the beginning of the year, according to Freddie Mac’s Primary Mortgage Market Survey. However, despite this rise, buying a new home in 2018 is still a wise decision for many people.
Although the current interest rates aren’t as low as they were a few years ago or even as recent as last year, the rates are similar to or lower than what we’ve seen in the last decade. The current rate on a 30-year fixed-rate mortgage—right around 4.5 percent—is right in line with the average over the last ten years. From May 2008 through December of 2017, the average rate on a 30-year fixed-rate mortgage was 4.4 percent.
Even with the slightly higher rates, buying a home is still affordable. Since an increase in interest rates is often partially the result of an improving economy, you may be able to afford more. According to the National Association of Realtors, the Housing Affordability Index—which measures a median-income family’s financial ability to purchase a home—was 163.0 for January, the most current month’s figures. The January numbers are perfectly aligned with the numbers for the past three years, averaging 163.4 for 2015 through 2017.
Finally, keep in mind that interest rates are just one financial component of buying a home. Of course, the interest rate you get on your new mortgage certainly does matter, but you shouldn’t just focus on that. The price of the home you’re buying, closing costs, relocation expenses, repairs and renovation costs, and other miscellaneous expenses can be just as important as the interest rate on your new mortgage. Saving money in any of these other areas can offset the expense of a slightly higher interest rate.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
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