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Bad News for Homebuyers Mortgage Rate Rise Above 5%

Mortgage Rate

Homebuyers may want to think again before going for a home at the moment. The mortgage rate has gone up. The average rate on a 30-year fixed mortgage is 5.02%. Read more…

Since 2011, this is the first time the mortgage rate has crossed 5%, other than in 2018 when it had happened for 2 days. The rising rate is not good news for homebuyers and rethinking the buying plan is on the table again for many.

Read on Fortune: The economic shock hitting the housing market just got bigger

Bidding wars may seem some relaxation as higher rates will price some buyers out of the market of buying homes. If an inventory is 48% it’s pre-pandemic level and this can happen if the number of homes for sale ticks up. The unsustainable levels of price appreciation is seeming to continue.

Read: 76% of Americans worry inflation will force them to rethink financial choices: CNBC survey

Investors on the other hand are seeming to like this particular news that is bad for buyers who need a mortgage to get a home for themselves. They are coming up with attractive scenarios for investing as this should benefit them from inflation and generate positive returns.

Advisors at Forbes asked dozens of housing experts on the subject of how the housing market is going to look in the next 5 years. Most of the experts said there were some warning signs but home prices could falter amid rising inflation. There is geopolitical uncertainty too to add to the point.

Reports who asked around about whether we are headed into a housing bubble said, “There are other fundamental factors to consider, including shifts in disposable income, the cost of credit and access to it, supply disruptions, and rising labor and raw construction materials costs are among the economic reasons for sustained real house-price gains.”

People have this strong belief that today’s robust price increases with continue to be like this, said Dallas Fed report. They added, “If many buyers share this belief, purchases arising from a ‘fear of missing out can drive up prices and heighten expectations of strong house-price gains.”

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