CINCINNATI — Thinking of buying a home, or at least looking for a home this year?
Mortgage rates are up sharply, now getting close to the 5 percent mark for the first time since pre-pandemic days. And that could be bad news for many prospective buyers.
With home prices up nearly 20 percent in the past year, at least mortgage rates were low, which kept monthly payments down for new buyers.
But that has all changed since March 1, with the Fed raising key interest rates, and hinting at more rate hikes to come.
In fact, just the hint of further rate hikes is causing mortgage lenders to raise their rates faster than normal.
The average 30-year mortgage is now up to 4.85 percent, according to the latest figures from Bankrate.com.
That's a sharp rise from 3.25 percent last fall, and 4.25 percent earlier in March.
How much more you may have to pay
Let's say you are planning to purchase a home with a $400,000 mortgage.
The rate increase since last December will add an extra $300 a month to that $400,000 loan, according to Fortune magazine.
If you didn't lock in a rate a few weeks ago, that could really hurt your purchasing power, or force you to look for lower priced homes.
So what can you do? Bankrate says if you can afford it, consider a 15-year mortgage, which is about a half point lower.
But there could be a silver lining.
Fortune says based on history, these rapidly rising rates should finally start to slow the red hot housing market, where homes get multiple offers within hours of listing, and end up selling for well above asking price.
But Fortune says don't expect higher rates to cause home prices to fall, as that has never happened in modern history.
It says higher rates should slow rising prices, which would at least be a positive thing for buyers.
As always don't waste your money.
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