Home buyers have become used to rock-bottom mortgage rates, but that could be changing. Rates have begun to rise, with the average 30-year rate now above 3%. Some experts expect mortgage rates to continue rising in response to sustained inflationary pressure.

Rates Over 3% for 30-Year Loans

The average 30-year mortgage rate was 3.05% on October 14, compared with 2.87% on August 12, according to Freddie Mac.* Rates for 15-year mortgages have also risen, averaging 2.3%, up from 2.15%.

What Happens When Rates Climb?

Though mortgage rates are still low by historical standards, buyers should be aware of how rising rates can affect their buying power. Low rates result in lower monthly payments, helping buyers qualify for higher loans and more expensive homes. Conversely, when rates rise, mortgage payments rise, meaning buyers qualify for smaller loans and less expensive homes. In short, higher mortgage rates may mean some buyers will have to search for homes in a lower price range.

*Freddie Mac plays an important role in increasing liquidity and stability in the housing market. It purchases mortgages from lenders, providing cash for lenders to make additional loans to home buyers.

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FOR EXPERT ADVICE buying or selling a home, contact Annette Nelson at (610) 247-7892 or annette@preferredhomes.com

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