For the 6th time this year, the Federal Reserve increased interest rates in November to fight rising inflation.
These rising rates are significant for those of you in the market for a mortgage. Mortgage rates aren’t directly tied to the Fed rates but are influenced by them. When the Fed rate changes, the prime rate for mortgages generally follows suit shortly afterward. This is exactly what has happened this year, with mortgage rates increasing from 3% in 2021 to the current rate of somewhere between 7% and 7.5%.
Should you buy a home right now?
Maybe, rates are higher than they have been in the recent past. But considering, historically, rates today are far better than they were in the early 80s when inflation was nearly the same as it is today. But if you can get a better deal on the sale price of a home, and you can afford that payment, you can probably refinance later. With higher rates, there are generally fewer buyers in the market, which can make for higher inventory for those shopping for a home. A higher inventory gives you, as the buyer, more bargaining power. A buyer today will be able to see many more homes than they would have even six months ago.
Also, there are lots of options available these days. Mortgage companies are constantly providing new products to give you better mortgage options. Products like a buydown, where you pay points to get a better interest rate for the first couple of years, are available. ARM mortgages are another option if we assume the market will correct in the next few years.
And, if your plan is to be in Salt Lake for the next three to five years, we think buying makes sense. Utah’s numbers are still strong, and there only remains a 31,000 housing unit shortage per the Kem Gardner Institute at the U of U, which is down from 56,000 a few years ago.
So, yes, rates are higher than most of us would like, but there are some benefits if you are patient enough to dig in and look. There is more inventory currently than we have seen in the last few years, and some great mortgage products are available. Let us help you find your dream home, and we can connect you with a great mortgage lender to help you get the best product for you.
Salt Lake City And You
SLCHomes.com is a great resource to learn more about the city.
You can check out all our blog posts at the SLCHomes.com Blog. This is a great resource for learning more about the current state of the Salt Lake residential real estate market.
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