What to Do When Mortgage Rates Are Rising
March 13, 2023
In the weeks leading up to New Year’s Eve at the end of 2022, some financial pundits speculated that 2023 would be, eventually, the year we move away from the seller’s market of summer 2022 and into an environment where falling mortgage loan interest rates bring potential borrowers back to house hunting.
But some look at current headlines in March 2023 and wonder where those predictions have gone. On March 8, 2023, Bloomberg.com reported mortgage rates increased for a fourth week in a row “to the highest level since mid-November, according to the Mortgage Bankers Association.”
One source reported rates once again breaching the 7% range, and numbers like that are bound to worry anyone considering purchasing or constructing a home this year.
Why Rates Are Going Up in March 2023
Many believe that the Fed’s ongoing efforts to tame inflation are squarely to blame for the rise in mortgage rates.
The Fed does not actively set mortgage loan interest rates, but those rates are affected by Fed actions such as increasing the costs of lending money. The Fed has indicated that aggressive strategies to slow inflation are not going away just yet.
That makes some house hunters and even some sellers pause.
What to Know About Rising Mortgage Rates
The optimism we mentioned at the start of this article about where mortgage rates might be headed. It’s crucial to remember that financial pundits indicated that real improvement might not show up until the third quarter (Q3).
At the time of this writing, rising rates are happening in the first quarter of the year (Q1), so we have another three months from the end of March before what was predicted might come to pass.
Will it?
Several factors put upward and downward pressure on mortgage loan interest rates. The Fed’s actions are only one component of the current and future market conditions where interest rates go. Investor reaction to Fed policy is another.
The investors don’t directly affect how rates are set. But if investors panic and pull their money out of riskier investments and shift toward bonds and Treasuries, that could influence mortgage rates one way or the other depending on circumstances.
And sometimes, that activity doesn’t move rates at all. It depends on the moment. If you haven’t started the application paperwork for a home loan, does it pay to wait a bit longer to see what mortgage rates will do?
If you aren’t ready to apply, it may be a good idea to keep working on your credit and wait out the rate changes in the short term.
Suppose you have already purchased a home and are contemplating refinancing. In that case, it may be wise to discuss with your participating FHA lender to ask about the timing of the loan and how that may affect your ability to get into a lower interest rate.
------------------------------
RELATED VIDEOS:
Don't Skip the Home Inspection
Bigger is Better With a Jumbo Loan
Insuring Mortgages With the FHA Funding Fee
But some look at current headlines in March 2023 and wonder where those predictions have gone. On March 8, 2023, Bloomberg.com reported mortgage rates increased for a fourth week in a row “to the highest level since mid-November, according to the Mortgage Bankers Association.”
One source reported rates once again breaching the 7% range, and numbers like that are bound to worry anyone considering purchasing or constructing a home this year.
Why Rates Are Going Up in March 2023
Many believe that the Fed’s ongoing efforts to tame inflation are squarely to blame for the rise in mortgage rates.
The Fed does not actively set mortgage loan interest rates, but those rates are affected by Fed actions such as increasing the costs of lending money. The Fed has indicated that aggressive strategies to slow inflation are not going away just yet.
That makes some house hunters and even some sellers pause.
What to Know About Rising Mortgage Rates
The optimism we mentioned at the start of this article about where mortgage rates might be headed. It’s crucial to remember that financial pundits indicated that real improvement might not show up until the third quarter (Q3).
At the time of this writing, rising rates are happening in the first quarter of the year (Q1), so we have another three months from the end of March before what was predicted might come to pass.
Will it?
Several factors put upward and downward pressure on mortgage loan interest rates. The Fed’s actions are only one component of the current and future market conditions where interest rates go. Investor reaction to Fed policy is another.
The investors don’t directly affect how rates are set. But if investors panic and pull their money out of riskier investments and shift toward bonds and Treasuries, that could influence mortgage rates one way or the other depending on circumstances.
And sometimes, that activity doesn’t move rates at all. It depends on the moment. If you haven’t started the application paperwork for a home loan, does it pay to wait a bit longer to see what mortgage rates will do?
If you aren’t ready to apply, it may be a good idea to keep working on your credit and wait out the rate changes in the short term.
Suppose you have already purchased a home and are contemplating refinancing. In that case, it may be wise to discuss with your participating FHA lender to ask about the timing of the loan and how that may affect your ability to get into a lower interest rate.
------------------------------
RELATED VIDEOS:
Don't Skip the Home Inspection
Bigger is Better With a Jumbo Loan
Insuring Mortgages With the FHA Funding Fee
Do you know what's on your credit report?
Learn what your score means.
