What Do the Changes in Interest Rates Mean to You?

You may have recently seen a dip in mortgage interest rates and wondered what should I do? Is it time to lock in my mortgage? Pull the trigger on that house or condo that we have been watching on Zillow? Or finally contact my local Realtor® at Senné? 

At the same time, your excitement may also be bolstered by the monthly June jobs report that was published recently. On the surface, this all seems good, right? More jobs, lower interest rates? Thumbs up, cheers. 

We at Senné, know that these signs, like stronger than expected job gains, are a primary flag to the Federal Reserve System (the Fed) that the economy is still strong, and their increased interest rate actions have not yet eased inflationary pressures. Given the recent announcement that year over year inflation came in at 9.1%, the highest since 1981, the data suggests that the Fed will continue their program of raising interest rates in an effort to slow the economy and bring inflation down to around 2% at some point in the future. 

What this means for you, the consumer, is that if you are thinking of buying a new property or refinancing an existing one, now may be the time. Freddie Mac’s most recent weekly interest rate survey (on July 21, 2022) noted that residential mortgage rates are averaging 5.54% for a 30-year fixed rate loan, 4.75% for a 15–year fixed rate loan, and 4.31% for a 5/1 ARM (adjustable rate mortgage). Of course, your individual residential interest rate may be lower or higher than the published average interest rate depending on a host of criteria including: your personal credit score, the amount of your down payment and the lender you choose to work with, among other factors. 

In this period of uncertainty, traditional strategies still remain and are more important than ever. The best way to know if you can afford a property is to get pre-approved for a loan from a trusted mortgage resource. This will give you a sense of what you can afford for a residential property, and the interest rate that will be offered on the loan. That coupled with an open discussion with your real estate associate at Senné will prepare you for the best chance of success. Once you take these actions, we recommend that you lock your interest rate time period through the closing of the home to avoid further interest rate increases.

Remember: locking your interest rate is a personal decision. You should do what’s best for your personal situation rather than trying to time the rising interest rate market. For more tips on home-buying or selling, contact your local Senné real estate associate and read more here.

If you are refinancing, we suggest that you compare term sheets from at least four, separate lenders before locking an interest rate. We anticipate that rates will continue to rise for the foreseeable future so the sooner you can lock-in your interest rate, the lower your monthly payment will be.

For additional assistance or if you have questions, a Senné Associate and our team of expert support staff are always available to help you navigate any and all real estate needs.

Disclaimer: Nothing in this blog post constitutes professional, financial, investment, tax or any other advice or recommendation.  Prior to entering into any real estate and/or mortgage transaction, you should carefully consider your financial situation and consult your financial, legal and accounting advisor(s) to understand the risks involved and ensure suitability for you.