Market Perspectives Blog Post

What should Buyers do in light of persistent high interest rates?​

At the end of the day, it appears unlikely that interest rates will see drastic changes this year, and it is even less probable that they will return to the historically low levels experienced during the pandemic. According to insights from the Mortgage Bankers Association, while a gradual decline in mortgage rates is anticipated, a new normal around 5% could be expected, marking a shift in what homebuyers might consider a favorable rate moving forward (MBA Newslink) (theMReport).

For buyers, the projected environment of relatively stable but not drastically reduced interest rates means adjusting expectations and planning accordingly:

  1. Adjusting Budgets: Buyers should plan for higher-than-historical-average mortgage rates, adjusting their budgets to accommodate around a 5% interest rate as a “new normal.” This is higher than the ultra-low rates seen during the pandemic but lower than the peaks observed recently.

  3. Long-Term Planning: Those looking to buy might consider more long-term fixed-rate mortgages to lock in rates close to current predictions before any future increases.

  5. Market Timing: With rates not expected to return to pandemic lows, waiting for significantly lower rates might not be beneficial. Buyers ready to purchase should consider entering the market when they find the right property, rather than trying to time the market for better rates.

  7. Exploring Options: Buyers should explore various financing options. Some might find more favorable terms with different types of loans or programs, especially first-time homebuyers who might benefit from various assistance programs.

  9. Considering Total Costs: High interest rates can significantly impact the total cost of owning a home. Buyers should calculate potential payments under different interest rate scenarios and consider how changes in rates could affect their long-term financial commitments.

  11. Home Choice: The type of home buyers choose may also be influenced by interest rates. In a higher rate environment, more affordable or smaller homes might become more appealing, or areas with lower property values could see increased interest.

Understanding these aspects can help buyers make informed decisions in a real estate market characterized by relatively elevated mortgage rates. Please email to start your home buying or selling journey. The Austin market can be tough to navigate.⁠ Don’t try to do it alone. Let’s Talk.