This year has already been a hot seller’s year with soaring house prices and tight demand. To add to that, we are also now facing rising mortgage rates. The surge in mortgage rates is putting an additional strain on homebuyers as they are already trying to keep up with the high housing costs. The shortage of supply, increased demand, and rising mortgage rates are causing an affordability crisis for many. A lot of people blame inflation for the housing uproar while others panic if we’re heading towards a financial crisis. Let’s examine those reasons in detail to see what’s exactly happening.

What’s Causing The Rising Mortgage Rates?

A multitude of economic reasons has contributed to the rise in mortgage rates so far this year. A major issue is persistently rising inflation. According to the Bureau of Labor Statistics, inflation was 8.3 percent in April, the highest level in 40 years. When inflation is high, interest rates tend to climb. Rising mortgage rates continue to complicate financial concerns for home buyers. For the first time in years, the average 30-year fixed mortgage rate topped 5%. In early May, the average fixed rate on a 30-year mortgage hit 5.27 percent. This is the highest level in over a decade. Other global concerns that could harm the economy, like China’s COVID lockdown and Russia’s invasion of Ukraine, are still affecting financial markets. Things like these are driving up mortgage rates.

How Inflation Is Impacting Mortgage Rates

Mortgage rates are not directly affected by inflation rates. However, because of how inflation affects the economy and the Federal Reserve’s monetary policy decisions, there may be indirect repercussions. Whenever the Fed raises its short-term interest rates, it frequently raises long-term interest rates on US Treasury bonds. According to Forbes, As inflation rises, the Federal Reserve is responding by tightening monetary policy. This is resulting in higher mortgage rates.

Are The Rising Mortgage Rates A Sign Of Financial Crash?

The higher your mortgage rate, the higher your monthly payment, which reduces your overall purchasing power. As mortgage rates rise, the rate you are quoted one day may be drastically different from the one you receive the next. There’s a lot of uncertainty revolving around mortgage rates so it’s best to not delay if you’re looking to buy a house. To guarantee you’re getting the greatest rate, request quotations from many lenders. For as long as you own this house, the rate will have a significant impact on your monthly affordability.

What The Future Holds For Buyers

So far according to the forecasts, mortgage rates and housing prices are predicted to stay high. Even if the demand dies down and the market slows down, less inventory is not going to satisfy everyone. The National Association of Realtors and The Mortgage Bankers believe that the situation will somewhat stay similar till the end of 2024. Mortgage rates may vary between 4.8% to 5.5%.

Secure The Best Mortgage Plan With Brokerly Today

Times are tough, especially for those who are about to buy their homes in these inflation-ridden times. If you’re looking to secure agents who can simplify the process of home loans for you, contact Brokerly.

Using artificial intelligence and machine learning, Brokerly generates thousands of mortgage leads from websites all over the internet. When the appropriate client is prepared to speak with you, our cutting-edge CRM filters the leads and keeps in touch with them. We will connect you with the best real estate agents in your region. So, what are you waiting for? Fill out our form and get connected with the right agents to secure the best deal now!

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